What is the average total return per year for large cap U.S. stocks over the long term?

The average total return per year for large-cap U.S. stocks over the long term is commonly estimated to be around 10%. This figure encompasses both capital appreciation (the increase in stock prices) and dividends paid to shareholders. Historical data shows that the performance of large-cap stocks averages about 10% annually when measured over several decades, particularly looking at indices such as the S&P 500, which represents a broad range of large U.S. companies.

The reason this figure is significant in personal finance and investing is that returns from large-cap stocks serve as a benchmark for investors, guiding expectations and planning for long-term growth in investment portfolios. Understanding this average return helps individuals make informed decisions about saving and investing strategies to achieve their financial goals over time.

While other potential answers might suggest lower returns, historically, the large-cap U.S. stock market has provided robust growth, accounting for periods of volatility and economic downturns.