What Is The Average Stock Market Return?

Talking averages are always tricky when you are talking about lumpy numbers. The average stock market return is the percentage change in the stock market value for one year or a period of years. 

The Stock Market Fluctuates

The shorter your timeframe, the greater the market volatility investors will face. Daily, prices can gyrate wildly with 24-hour financial news chatter you should ignore. Many of the talking heads react to minute updates that often sensationalize blips in the stock markets from arcane and sometimes meaningless information and create anxiety, or worse, mania. 

Why S&P 500 Matters

The S&P 500 composite index is the most widely accepted benchmark of the stock market returns of experienced investors, analysts, and portfolio managers, but the media tends to focus on the Dow. 

Take A Long Term View of The Market

You have a better chance of attaining a 10% average stock market return when you take on a long-term view. Warren Buffett said, “I never attempt to make money on the stock market. I buy on the assumption that they close the market the next day and not reopen it for five years.” 

Bull Markets, Bear Markets, And Market Corrections

Long-term investors understand that the market is subject to dramatic swings in the market. Since 1871, the stock market has spent 40% of all years rising or falling more than 20%. Thus booms and busts are normal. 

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