Average stock market return calculator

Total return and annualised return are different things

A 135% total return sounds impressive until you learn it took twenty years, which is about 4.4% a year. Annualised return - CAGR - is the only figure that compares holdings of different lengths fairly.

It is also the figure to compare against a benchmark. Beating a 7% market average with 6% over the same period means the extra effort cost you money.

What the long-run averages actually are

Broad developed-market equity indices have produced long-run nominal returns in the high single digits, with real returns after inflation typically a few points lower. Individual decades have ranged from strongly negative to well above average.

Any single year is close to unpredictable. The averages only become meaningful across decades, which is precisely why long horizons are treated as the investor's main advantage.

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