S&P 500 Index Fund Average Annual Return Rate

Here's why investing in an S&P 500 index fund could pay off nicely over the long term.

By Keith Speights – Updated Aug 7, 2025 at 2:44 PM | Fact-checked by Margo Winton Parodi

Key Points

Investing in the S&P 500 index offers exposure to 500 of the largest U.S. companies, simplifying diversified investing.
Historically, the S&P 500 has returned an average of over 10% annually, showcasing long-term gains.
S&P 500 funds, available as ETFs or mutual funds, provide a practical option for investing in the S&P 500.

Man standing on one coin, looking out to larger and larger stacks of coins ahead. — Image source: Getty Images.

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How would you like to own shares of 500 of the biggest companies traded on U.S. stock exchanges in one fell swoop? That's what you get when you invest in the S&P 500 index, which tracks the performance of 500 of the largest stocks weighted by market cap that trade on the Nasdaq and the New York Stock Exchange (NYSE). And you can profit handsomely from such an investment; the average annual return for the S&P 500 is close to 10% over the long term.

The performance of the S&P 500 index is better in some years than it is in others, though. Here's how the S&P 500 index has performed in recent decades -- and why it's an attractive option for many investors.

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Data source: Slickcharts.com.
Year	S&P 500 Return
1995	37.58%
1996	22.96%
1997	33.36%
1998	28.58%
1999	21.04%
2000	-9.10%
2001	-11.89%
2002	-22.10%
2003	28.68%
2004	10.88%
2005	4.91%
2006	15.79%
2007	5.49%
2008	-37%
2009	26.46%
2010	15.06%
2011	2.11%
2012	16%
2013	32.39%
2014	13.69%
2015	1.38%
2016	11.96%
2017	21.83%
2018	-4.38%
2019	31.49%
2020	18.40%
2021	28.71%
2022	-18.11%
2023	26.29%
2024	25.02%
2025	8.69%

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If you had invested $10,000 in the S&P 500 index in 1995, you'd now have more than $190,000. Market volatility in a given year could cause this return to decline somewhat. However, the index has proven to be a winner over the long term.

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Data source: Yahoo! Finance.
ETF	Expense Ratio
iShares Core S&P 500 ETF (NYSEMKT:IVV)	0.03%
SPDR S&P 500 ETF Trust (NYSEMKT:SPY)	0.09%
Vanguard S&P 500 ETF (NYSEMKT:VOO)	0.03%

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The main difference between buying S&P 500 ETFs vs. mutual funds is that ETFs trade like a stock. You can buy or sell an ETF instantly through a brokerage at the then-current price. Mutual funds are priced daily, and your purchase or sale isn't instantaneous.

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Related index fund topics

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About the Author

Keith Speights is a contributing Motley Fool healthcare analyst covering publicly traded companies across pharmaceuticals, biotechnology, medical devices, technology, and marijuana. Prior to The Motley Fool, Keith was CEO of Constant Care Technology, a healthcare technology company; vice president of American HealthTech, a healthcare software company; and a director of operations for Blue Cross Blue Shield of Mississippi, a health insurer. He holds a B.S. in Industrial Engineering from Mississippi State University.

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Keith Speights has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.