How Much Can You Realistically Make Investing in Stocks Per Year?

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By Richard

The amount of money generated from stocks depends on several factors. Where you choose to invest matters when you start investing, and consistency of the investments also counts. When all these factors align, then you will be able to make a lot of cash.

You have to be smart when you go about it. It will not be wise or logical for you to invest all your money in one stock, and for a single year, with the expectation of a good return, which may or may not happen. Therefore, you have to do your research and plan on the same. It should not be a decision made lightly.

So how much can you earn from stocks in a year?

You can get 7% to 10% returns on the money you invest annually, on a long-term basis. That is the average prediction made by almost all analysts for the past 100 years. The conclusion is not from a single year.

For example, in 2008, 500 of the biggest businesses together (S&P 500) brought returns of -38.5% loss that saw the crashing of the stock market. However, in 2009 the S&P 500 brought gainful returns of +23.5%.

This example emphasizes the point that any year on its own can bring in differing returns that are on the extreme. The expectation of 7%-10% can only be arrived at when many years are at play.

If you are referring to a short time, stock returns are unpredictable, with some years being better than others. An analysis of 89 years, between 1926 and 2014, saw average returns of 10.2% every year. In all these years, 8% to 12% was arrived at in only six years. The overview of the last 92 years, running from 1926 to 2017, shows positive returns in every single year in the stock market.

But when the years were grouped into five, and the average returns were better. They showed 86% positive gain. When they averaged clusters of fifteen years, they showed a 100% positive gain through that period. That means that within these clusters of fifteen years, the stock market did not lose any money.

If you have to refer to a specific year, the returns could be worse or better than 7% to 10%.

How does your money increase in the stock market?

Through dividends

40% of what you get from the stock market comes from dividends. You, therefore, need to be keen on the dividend stocks. However, this fluctuates with time.

The observation has been that dividends play a vital role in the stock market returns over time. If, for example, you invested 10K dollars in various stocks, it will double after ten years to give you 20K dollars. It is highly likely that 4K dollars out of the gain came from dividends and 6K came from rising stock prices.

That means that 40% of the profits from that stock came from dividends, and 60% was the outcome of price appreciation. Time has shown that 40% of the stock returns come from profits. Morningstar collected stock market data in the 1970s that showed that dividends totaled 73% of the gain. However, when the stock prices went up, earnings gave little returns of 17% only.

Nevertheless, they are a vital part of the stock market. It is part of what you should consider when buying stocks.

Making wise investments

For you to get good returns, you must make wise investments. You cannot purchase stock like any other investor. That is because many investors make mistakes that prevent them from getting 7% to 10% yearly returns in the stock market.

According to an analysis done by J.P. Morgan of the years between 1998 and 2017, the average investor got only 2.6% returns, barely making it out of inflation. On the other hand, the S&P 500 made +7.2% annual returns, within the 7-10% expected annual returns.

The people who invest may get better returns or bad returns than the market. To fare well in the market, they have to be careful not to make common mistakes. When informed investments happen, the investor can exceed the 7%-10% average range of performance.

Compounding stock for extended chunks of time

Compounding stock over a long time, like in decades, has the power to spin you great wealth. What you gain will cross impossible heights. If you invest 10K dollars every month in the stock market for 30 years, that will total up to 300K dollars.

If this will grow by 7% average annual returns, they will be $710,730. So you will end up with 1,010,730 dollars. If the time goes for 60 years instead of 30, and everything else stays the same, your total investment will be 600K dollars. The returns you get will be $8,104,668. All your money will be $8,704,668.

Therefore, what you earned in 30 years in stocks will be 710,730 dollars, and in 60 years, it gets to $8,104,668.

In compounding, you get more each year than the last. So whereas, you get only 700 dollars returns in the first year from $10K, at 7%, when the same rate of 7% is applied, in the 60th year, it is done so on the whole amount of over 8 million dollars you have already earned.

Some of the returns you get are definitely from the annual deposits you make, in this case, being $10K. But most of the increase in your stock investment will be due to compounding.


Therefore, the longer you keep your money in the market, the more money you will accumulate. When you invest a large sum of money, the money you get in the long run will be more than if you invested a smaller amount of money.

If you decide to add a little more money to your investment returns, it will impact your wealth positively in the long run. You also have to make sure your investment gains do not get taxed so that you can grow your money more. Finally, always remember that your investment returns of solid stock compounded over a long time will spin unimaginable wealth.

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