SP500 decades chart, 1920's to now

[Lsbcal]

I periodically update this chart which seems to resonate with forum members. It overlays the SP500 for each decade since the 1920's. Of course, splitting into decades is arbitrary but we tend to talk about decades ... and lost decades, etc. It's a good reminder of how good and bad investing can get.

Each decade (120 months) is given a different color. The chart gets a little congested. The thick blue line is the current 2020's decade through 2021. The SP500 plus dividends is shown and is inflation corrected. You can see a dashed black line which is a 7% growth rate on this semilog scale and is roughly what the SP500 has averaged after inflation.

You can see the crash of 1929 (yellow) followed by the great depression plus WW2 in the 1930's (dashed blue dots). Also the 1987 (black) crash which yours truly went through.

You can see that the 2000's (orange) were pretty ugly with 2 recessions. This has been followed by the 2010's (purple) which were great and so far the 2020's have been a continuation of great.

What follows ... ? The chart does not tells us that.

Happy New Year and good luck in 2022 !

 

[donheff]

It always surprises me how lousy the 2000's chart is. I ERed in 2005. If I saw all that coming I would have been reluctant to pull the plunge. In the rear view mirror it was just a bump on the road - so far. Ignorance is bliss.

 

[OverThinkMuch]

Wow those 1920s were doing great, and only that little drop at the end... which is shown in the next decade as the great depression! I mention it as one of those examples where the cutoff is arbitrary, but it's commonly accepted.

As to what follows... Morningstar shows the S&P 500's 3 year performance was about 26%/year. I think a good estimate is "worse". The stock market is very unlikely to have 26% gains every year for a decade. So prepare for worse performance than that.
https://www.morningstar.com/etfs/arcx/spy/performance

 

[Lsbcal]

It always surprises me how lousy the 2000's chart is. I ERed in 2005. If I saw all that coming I would have been reluctant to pull the plunge. In the rear view mirror it was just a bump on the road - so far. Ignorance is bliss.

Yes, that 2008-2009 decline was scary and you can see from the chart just how dramatic it was. I was ER'd in 2004 and learned first hand that a bad decline without an earned income can be especially scary. It can really throw your financial planning off.

 

[Lsbcal]

Wow those 1920s were doing great, and only that little drop at the end... which is shown in the next decade as the great depression! I mention it as one of those examples where the cutoff is arbitrary, but it's commonly accepted.

As to what follows... Morningstar shows the S&P 500's 3 year performance was about 26%/year. I think a good estimate is "worse". The stock market is very unlikely to have 26% gains every year for a decade. So prepare for worse performance than that.
https://www.morningstar.com/etfs/arcx/spy/performance

Vanguard shows their SP500 fund having a yearly return of 28.7%. And yes, I'm not planning on that repeating. Hoping for an average year which would be around 10% return on the SP500. But other asset classes (value, international, ?) could be much better ... or worse.

 

[chassis]

Thanks. Do you have a total return chart?

Dividend payouts have changed quite a bit. SP500 returns are boosted to a greater degree decades ago, compared with the recent decade or two.

 

[Lsbcal]

Thanks. Do you have a total return chart?

Dividend payouts have changed quite a bit. SP500 returns are boosted to a greater degree decades ago, compared with the recent decade or two.

The chart includes dividends so it is total return.

 

[chassis]

Quite right, it helps if I read the notes. Thanks.

 

[Backpacker]

Yes, that 2008-2009 decline was scary and you can see from the chart just how dramatic it was. I was ER'd in 2004 and learned first hand that a bad decline without an earned income can be especially scary. It can really throw your financial planning off.

I was hitting my highest income years in the 2000's and throwing money at Roth and 401k like a crazy person. I think the rebound was a huge factor for our RE. Probably shaved 3 years off my original plan.

 

[jollystomper]

You can see that the 2000's (orange) were pretty ugly with 2 recessions. This has been followed by the 2010's (purple) which were great and so far the 2020's have been a continuation of great.

I was very lucky with this timing. 1999 was around when I started maximizing my 401K contributions and moved away from individual stocks and "specialty" mutual funds towards broader index funds. I also started my best earning years in the early 2000s Being able to invest in the market through the 2000s. (despite having to deal with kids college expenses during that time) has paid off handsomely in the long run.

 

[perez99]

Excellent chart. Thanks for putting it together!