What is the average annual return of the stock market since 1926?

For example, a person investing $10,000.00 for one year may desire a gain of $1,000.00, or 10%, providing a total return of $11,000 in one year. In reality, investing, as opposed to saving, rarely provides such a neat solution. For example, the average annual compound return of the broad American stock market over the time period from 1926 to 2006 was just over 10% per year. During that eighty year period though, there were more than a few times when massive declines in market value were experienced by investors in that same stock market. From early in the year 2000 through the fall of the year 2002 for example, the broad measures of market valuation, such as the S&P 500 Stock Index fell over 50%. For an investor in 2006 to have seen that average compounded 10% return in the S&P 500 Index, he or she would have had to invest in 1994. The 10% average annual rate or return was there, it just took twelve years of patient waiting to see it.