S&P 500’s Historical Returns and Future Projections: A $20,000 Investment Over 20 Years

The S&P 500 has long been a cornerstone of passive investing, boasting an annualized return of approximately 10% over nearly a century, including dividends. Recent years have seen even stronger performance, with total returns exceeding 25% in both 2023 and 2024. As of mid-2025, the index is up 14%, raising questions about sustainability.

While index funds tracking the S&P 500 offer broad market exposure, some analysts caution against expecting continued outsized gains. Historical data reveals periods of single-digit growth or even declines, reminding investors that past performance doesn't guarantee future results. A $20,000 investment compounded at 10% annually WOULD grow to roughly $135,000 in 20 years, but more conservative estimates may be prudent given current valuations.