What the industry tells you about returns — and what is actually happening to your money
A $100,000 investment in the S&P 500 in 2000 would be worth roughly $470,000 in 2025. The industry says the average return was over 7%. The reality is far less comfortable.
Conventional Thinking About Stock Market Returns
Many financial professionals claim the S&P 500 averages 10% over long periods. Here is what that looks like on paper.
Many financial professionals claim the average rate of return of the stock market (S&P 500) to be 10% over a long period of time.
If that is true, then if you invested $100,000 into the stock market at the beginning of 2000, the table to the right shows how your investment would have performed.
Congratulations — in this hypothetical scenario, you turned a $100,000 investment into over $1,000,000 in 26 years.
But is this the reality of how the S&P 500 actually performed? Scroll down for the answer.
| Hypothetical S&P 500 Returns (10% Every Year) | ||
|---|---|---|
| Year | Rate of Return | End Balance |
| End Result | ||
The Reality of Stock Market Returns
Actual S&P 500 annual returns from 2000 to 2025, before fees. The story changes considerably.
Here are the actual returns of the S&P 500 from 2000 to 2025, absent of any fees.
There were seven years of negative returns — 2000, 2001, 2002, 2008, 2015, 2018, and 2022 — highlighted in red.
There were also years with returns of 20% or more — highlighted in green.
Because of those loss years, the final result was only — — far less than the hypothetical $1,000,000+.
The arithmetic average return was —. But the actual compounded rate of return — what your money really earned — was only —. Scroll down to understand why that gap exists.
| Actual S&P 500 Returns (2000 – 2025) | ||
|---|---|---|
| Year | Rate of Return | End Balance |
| End Result | ||
| Average ROR | ||
Your Actual Compounded Rate of Return
The “average” return is not the number that determines where your money ends up. The compounded rate is.
In this table, you can see that the actual compounded rate of return for the S&P 500 over 26 years (2000–2025) is approximately —.
This is — less than the widely accepted average of 10% — and meaningfully less even than the reported arithmetic average.
Because of how compounding works, loss years cost you far more than gain years reward you. The math is permanently asymmetric.
What if there was a way to participate in market gains while being able to lock in those gains — and never suffer a down year? See below.
| S&P 500 Actual Compounded ROR | ||
|---|---|---|
| Year | Rate of Return | End Balance |
| End Result | ||
The Break-Even Burden
Losses are not symmetric with gains. A 50% loss requires a 100% gain just to return to where you started.
The Break-Even Burden
The Biggest Lie in the Financial Industry
Walk through a simple example that exposes how the industry obscures what is really happening to your money.
The Indexing Strategy
Participating in market gains while eliminating the damage of loss years entirely produces a dramatically different outcome.
The Indexing Strategy applies a 0% floor: in any year the market is negative, your account returns 0% instead of going negative — your gains are locked in. In positive years, you participate fully in the upside. One rule change. A dramatic difference over time.
| S&P 500 Actual Returns | ||
|---|---|---|
| Year | Rate of Return | End Balance |
| End Result | ||
| Actual ROR | ||
| Indexing Strategy (0% Floor, Uncapped) | ||
|---|---|---|
| Year | Rate of Return | End Balance |
| End Result | ||
| Actual ROR | ||
Historical Return Comparison — 2000 to 2025
Growth of $100,000 starting in 2000
Indexing Strategy (w/ Guarantees)
S&P 500 Market Returns
See how this applies to your retirement
Use the Avanti Alliance calculator to compare your 401(k) projection against an Indexing Strategy — side by side, with your actual numbers.