The Historical Rate of Return for the Stock Market Since 1900

Posted on by Tom DeGrace

Historical rate of return
The Historical Rate of Return for the major indexes is an important part of stock market history.  The rate of historical returns needs to include dividend distributions in order to get an accurate measure of the total return one would have gotten from investing in the stock market.

During the 20th century the stock market returned an average of 10.4% a year.  Just $1,000 invested in 1900 would be worth over $19.8 million by the end of 1999.  At 15% average return per year, it only takes 30 years to turn $15,000 to $1 million.

Stock Market History of Returns

Decade Average Return Per year
1900s 9.96%
1910s 4.20%
1920s 14.95%
1930s -0.63%
1940s 8.72%
1950s 19.28%
1960s 7.78%
1970s 5.82%
1980s 17.57%
1990s 18.17%
2000s 1.07%
2010-2013 16.74%

 

How the Historical Rate of Return of the Stock Market is Calculated

Over the stock market history corporate earnings have gone up an average of 7% per year and the inflation history of the markets shows that inflation has averaged around 4% per year.

The % weights of sectors has changed a lot from 1900 to 2000.  For example back in 1900, railroads made up over 60% of the stock market yet make up only .2% today.  More than 60% of American’s lived in rural areas in 1900 and by 1990 that number had dropped to less than 25% according to the U.S. census.

What we have done is compiled data that shows the price change and dividend distribution to come up with the total market return.

For other uses, see how the historical rate of return varies greatly based on stock market historical events

2 Responses to The Historical Rate of Return for the Stock Market Since 1900

  1. Chris says:

    Oh! Avg. returning rate in 1990s is quite impressive

  2. Charles says:

    There is an important investing lesson involved here. Investing is more about patience and discipline than timing.

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