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I managed to google out that NASDAQ has an annual return of 5.6%, which is quite excellent, but then again, I did that googling a very long time ago.

So can anyone please enlighten me a bit on this?

  • I wouldn't necessarily think that past returns are predictive of future results; especially with the precision of a fraction of a percent. There is a reason for the ubiquitous disclaimer "Past performance is not indicative of future results". – ChaimG Jan 22 '17 at 21:35
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When asking about rate of return it is imperative to specify the time period. Average over all time? Average over the last 10 years? I've heard a good rule of thumb is 8-10% on average for all stocks over all time. That may be overstated now given the current economic climate.

You can also look up fund sheets/fact sheets for major index funds. Just Google "SPY fund sheet" or "SPY fact sheet". It will tell you the annualized % return over a few different periods.

  • Yeah, the time period is really important. There were a couple of years after the '08 crash where my funds were returning 20%+ per year. I've heard that 4% per year after inflation is a good long-term average. – jamesqf Nov 21 '16 at 18:00
  • @jamesqf How about the >20% return? Why did it perform so well after the crash, does it hold true the saying "when people are crying, it's time for buying"? I'm very much curious and also a bit baffled. – PowerPack1 Nov 22 '16 at 5:56
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This page from simplestockinvesting.com gives details of total returns for the S&P500 for each decade over the last 60 years, including total returns for the entire 60 year period.

It is important to understand that, from an investors point of view, the total return includes both the change in index value (capital gain) plus dividends received. This total then needs to be adjusted for inflation to give the "total real return".

As noted in the analysis provided, 44% of the total return from the S&P500 over the last 80 years comes from dividends.

For the DowJones30, this site provides a calculator for total returns and inflation adjusted total returns for user selected periods.

Finding comparable analysis for the NASDAQ market is more difficult. The NASDAQ market site provides gross values for total returns over fixed periods, but you will then need to do the arithmetic to calculate the equivalent average annual total returns. No inflation adjusted values for "real" returns are provided, so again you will need to combine inflation data from elsewhere and do the arithmetic.

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