Stock market returns by decade are often used as markers for measuring past performance and estimating future performance more reliably for retirement planning purposes. And we all know that stock market gains can be excellent passive wealth builders in most decades, so let’s see what happened last decade, and how can we use that data to help us prepare for the next decade.
What was the annual return of stocks from 2010 through 2019?
The annualized growth rate for stocks from January 1, 2010, to December 31, 2019, was 13.50%, according to my calculation using the CAGR Money Chimp calculator shown and explained in this post.
But keep reading because there are some very important factors investors will want to understand about reported stock market returns since these factors affect the reliability of using reported returns.
Also. note you can use this calculator to check past performance for any time frame so this is a great tool for you to understand and master. In checking past stock market performance, you’ll notice that there are a lot of small variations about annual stock market returns from different calculators and financial publishers based on the variables explained below.
These small variations can be very important when you’re planning for retirement, choosing investment funds, hiring a financial advisor or even evaluating a wealth manager’s performance. Please also note that the 2019 data is subject to revision.
You can access this same calculator any time to check the annual return from 2010 through 2019 or any other desired time frame here.
Regular readers at Retire Certain know I like to use facts, historical data, logic and math as core investing tools since it steers us away from emotional investing so understanding these numbers is important.
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Stock Market Return Calculator
First, different calculators and financial services use different indexes to obtain return averages. As for the US stock market, most, however, use the S&P 500 index nowadays.
Here is an image of the calculator I used to get the annual stock market return from 2010 through 2019. You can see how simple this is. (I discovered MoneyChimp.com over a decade ago!) 
First I’ll clarify a few things you’ll want to know in annual return calculators which are important to understand if you’re going to use this information. Read my related post How Much Money Do You Need to Retire?
Stock Market Return Calculation
This is important: Sometimes the simple average is used for a return calculation, but the annualized return presents a more realistic return number.
This is also known as the Compound Annual Growth rate. Note that this is also called the CAGR. According to Money Chimp, the simple average is usually about 1% to 2% more than the annualized growth rate.
The stock market return based on the simple average return from 2010 to 2019 is 14.09% as you can see from the image above. But the Compound Annual Growth Rate is 13.50%.
While 1% to 2% may not seem like a big deal, it is! This is especially true over long periods of time like retirement, or for large amounts of money. Read my related post Are Dividends or Capital Gains Better?
Are Dividends Included in Annual Return?
Some stock market return calculations include dividends and some exclude dividends. If we exclude dividends from the stock market return from 2010 through 2019, note from the image below that the CAGR return for 2010 through 2019 drops to 11.16%.
The reason for including or excluding dividends is so important is that many investors look to past stock market returns to estimate future returns for retirement planning.
If you’re planning to live off investments, such as dividend income, it will be important to exclude dividends from the annual stock calculation since you’ll be spending the dividends to live.
You’ll still get the dividends but they won’t be reinvested into more shares and the dividends won’t be compounding. Remember, compounding is an important part of investment returns. I explain this more in my post How Much Money Do You Need to Live Off Investments?
Stock Market Returns Past Decade Vs Prior Decade
Stock market annualized returns from 2000 through 2009 were -2.72% excluding dividends. What a contrast of the stellar stock market returns from 2010 through 2019.
Annualized Returns Vs Simple Returns
Return calculations can be a little tricky. Financial marketing material will often provide the return calculation that looks the best. There is no evil in this.
They are selling a product or service in the same way that my local boutique is selling a dress with their products presented in the best possible way.
It’s up to us, as educated investors, to understand how investment returns are calculated and presented to us. Then we can make sure we are comparing apples to apples when selecting investment products or evaluating financial advisor performance.
The best place to start is with my Ultimate Wealth Plan. You can get it here now.
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