Here’s How Much Investment Returns Have Mattered in Each Decade Since 1930

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4 min read

Here are the yearly returns of the S&P 500 from 2000 to 2009:

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Assuming you started with $0, here’s how your net worth would have grown if you invested $10,000 in an S&P 500 index fund at the start of each year from 2000 to 2009:

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Your net worth would have grown from $0 to $105,210 during this decade.

And here is how investment returns would have contributed to this net worth growth:

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The purple area represents your total net worth and the blue area represents the percentage of your total net worth that came from investment returns. 

Since this was an awful decade for the S&P 500, investment returns barely contributed to your net worth growth during this time frame. In fact, by the end of this decade only 5% of your total net worth would have come from investment returns:

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Here are the actual numbers from the chart above:

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And here’s a look at investment returns as a percentage of total net worth during this decade:

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It’s interesting to see that investment returns accounted for 24% of total net worth in 2007, but the market drop in 2008 wiped out all of these returns.

During this decade, you would have invested $100,000 and ended with a net worth of $105,210. This means only $5,210 (about 5%) of your net worth would have been composed of investment returns.

Now let’s generate this same chart for every decade since 1930. Again, we’ll assume you start each decade with $0, invest the same amount in the S&P 500 at the beginning of each year (the actual amount doesn’t matter since we only care about percentages), and we’ll find out how much of your ending net worth would have been composed of investment returns:

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invest1950s

invest1960s

invest1970s

invest1980s

invest1990s

invest2000s

invest2010s

Conclusion

The best period for S&P 500 returns was the 1990s, where returns accounted for a whopping 70% of net worth growth.

The worst period for S&P 500 returns was the 2000s, where returns accounted for a pathetic 5% of net worth growth.

S&P 500 data for this analysis came from this NYU Stern spreadsheet


My favorite free financial tool I’ve been using since 2015 to manage my net worth is Personal Capital. Each month I use their free Investment Checkup tool and Retirement Planner to track my investments and ensure that I’m on the fast track to financial freedom.

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