The S&P 500: A Look Back and Ahead
Strong Historical Performance
The S&P 500 index has a long and successful history of delivering returns to investors. Since its inception in 1957, the index has returned an historic annualized average return of around 10.26% through the end of 2023.
Consistency and Volatility
While the S&P 500's returns have been impressive, they have not been without volatility. The index has experienced periods of both strong growth and significant declines. However, over the long run, the index has consistently outperformed long-term Treasury bonds, which have provided a more stable but lower average return.
Decade-by-Decade Returns
The S&P 500 has had varying returns over different decades. The highest decade average return was achieved in the 1980s, when the index returned an average of 16.61% per year. The lowest decade average return was in the 1970s, when the index returned an average of 6.56% per year.
Early History
The S&P 500 index has evolved over time. The index originally started in 1926 when it was composed of 90 companies. At that time, the index was known as the Standard Statistics Composite Index. Over the years, the index has been expanded and its composition has changed to reflect the changing economic landscape.
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