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What are S&P returns?

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Quick Answer

S&P returns are the annual increases investors experience for sums invested in the S&P 500 stock index, as Investopedia explains. During the years between 1928 and 2014, annual S&P returns averaged roughly 10 percent. Adjusted for inflation, the average return was 7 percent. Because the S&P 500 experiences fairly large short-term fluctuations, S&P investors can't automatically double their investments during all 10-year intervals.

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Full Answer

The S&P 500 is a conglomeration of 500 stocks that reflect the overall performance of the U.S stock market, as Investopedia details. Over time, the S&P 500 evolves as companies are added or dropped from it. The S&P 500 Index Committee selects what firms are among the S&P 500. This committee is solely comprised of financial analysts from Standard and Poor's, which is a leading financial services provider.

For most investors, it isn't practical to invest in all the S&P 500 stocks, according to Investopedia. Nevertheless, investors can indirectly profit from S&P returns by putting money in S&P-based mutual funds or exchange-traded funds.

S&P returns were consistently outstanding for investors who bought stocks between 1950 and 1965, and investors received the highest S&P returns between 1983 and 2000. September 2001 saw S&P returns dip as the stock market experienced a record-breaking crash, as reported by CNN.

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