The average stock market return over the past 10 years

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• The S&P 500 has gained about 10.7% on average annually since it was introduced in 1957. 
• The index has done slightly better than that in the past decade, returning about 14.7% annually.
• Returns can fluctuate widely each year, but holding onto investments over time can help.
• Start investing today with SoFi Active Invest »

The S&P 500's average annual returns over the past decade have come in at around 14.7%, beating the long-term historic average of 10.7% since the benchmark index was introduced 65 years ago.

But the stock market return you'll see today could be very different from the average stock market return over the past 10 years. There are a few reasons why you could see a bigger or smaller return than the average during any given year.

The S&P 500's return can fluctuate widely year to year

There are many stock market indexes, including the S&P 500. This index includes 500 of the largest US companies, and some investors use its performance as a measure of how well the market is doing.

Here's how the yearly annual returns from the S&P 500 have looked over the past 10 years, according to Berkshire Hathaway data that includes earnings from dividends:

Berkshire Hathaway has tracked S&P 500 data back to 1965. According to the company's data, the compounded annual gain in the S&P 500 between 1965 and 2021 was 10.5%.

While that sounds like a good overall return, not every year has been the same.

While the S&P 500 fell more than 4% between the first and last day of 2018, its total return surged 31.5% in 2019. Plus, returns jumped from 18.4% in 2018 to 28.7% in 2021. However, when many years of returns are put together, the ups and downs start to even out.

It's worth noting that these numbers are calculated in a way that may not represent actual investing habits. The figures are based on data from the first of the year compared with the end of the year. But the typical investor doesn't buy on the first of the year and sell on the last. While they're indicative of the growth of the investment over the year, they're not necessarily representative of an actual investor's return, even in one year's time.

Also, when you're buying stocks, you're not necessarily buying the entire S&P 500. Some investors choose to buy shares of individual companies on the S&P 500. Some opt for mutual funds, which allow investors to buy a portion of several different stocks or bonds collectively. These individual mutual funds or stocks all have their own average annual returns, and that particular fund's return may not be the same as the S&P 500's. 

Plus, even if you an invest in an S&P 500 index fund, a high expense ratio — the cost of owning your shares — may reduce your overall returns to below average. And, of course, past performance does not predict future returns. Just because this is the S&P 500's average return, doesn't mean you can count on it going forward.

Buy-and-hold evens out the market's fluctuations

Investing experts, including Warren Buffett and investing author and economist Benjamin Graham, say the best way to build wealth is to keep investments for the long term, a strategy called buy-and-hold investing. 

There's a simple reason why this works. While investments are likely to go up and down with time, keeping them for a long period helps even out these ups-and-downs. Like the S&P 500's changes noted above, keeping investments for the long term could help investments and their returns get closer to that average.