The following charts show how much a $1,000 investment in the S&P 500 was worth 5, 10, 20, and 30 years after being invested. The charts go back to 1950 and assume any dividends were reinvested.
How to interpret this graph: A $1,000 investment in the S&P 500 in 2012 was worth $1,970 five years later.
Highest 5 year return: $3,476 (1995 – 1999)
Lowest 5 year return: $889 (1970 – 1974)
Average 5 year return: $1,777
How to interpret this graph: A $1,000 investment in the S&P 500 in 2007 was worth $2,013 ten years later.
Highest 10 year return: $5,919 (1950 – 1959)
Lowest 10 year return: $889 (1999 – 2008)
Average 10 year return: $3,001
How to interpret this graph: A $1,000 investment in the S&P 500 in 1997 was worth $4,332 twenty years later.
Highest 20 year return: $26,017 (1980 – 1999)
Lowest 20 year return: $3,699 (1962 – 1981)
Average 20 year return: $8,879
How to interpret this graph: A $1,000 investment in the S&P 500 in 1987 was worth $17,876 thirty years later.
Highest 30 year return: $46,229 (1970 – 1999)
Lowest 30 year return: $14,946 (1956 – 1985)
Average 30 year return: $24,478
Some Interesting Observations
- The S&P 500 only lost money twice during any ten year period since 1950. This means if you invested $1,000 in any given year, ignored the market, and checked your investment 10 years later, in 56 out of the 58 ten year periods you would have made money.
- On average, an investment in the S&P 500 would have tripled in value over any ten year period.
- An investment during the worst 30 year period since 1950 still would have increased in value nearly 15 times.
- In the short term, the market fluctuates wildly and it’s possible to lose money on an investment, but over the long term the market is a money-making machine for people who remain invested.
Zach is the author behind Four Pillar Freedom, a blog that teaches you how to build wealth and gain freedom in life.
Zach's favorite free financial tool he's been using since 2015 to manage his net worth is Personal Capital. Each month he uses their free Investment Checkup tool and Retirement Planner to track his investments and ensure that he's on the fast track to financial freedom.
Although the bulk of his net worth is invested in index funds, his favorite place to invest in individual stocks is M1 Finance, a site that allows you to build a custom portfolio of stocks for free.
His favorite way to save money each month on his recurring bills is by using Trim, a free financial app that negotiates lower cable, internet, and phone bills with any provider on your behalf.
His favorite place to find new personal finance articles to read is Collecting Wisdom, a site that collects the best personal finance articles floating around the web on a daily basis.
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