The average return of stocks: what you can expect

What do we mean by “average return”?

When we talk about the “average return”, we mean the yearly growth rate your investment would need to go from its starting value to its ending value, taking compounding into account.

Let’s take an example. If €1,000 grows to €10,000 after 30 years, your annualised return is roughly 8%. That means your investment increased by 8% per year on average, even though some years were negative and others saw strong gains.

There are two ways to calculate an average:

• Arithmetic average: The simple mean of yearly returns. It’s easy to calculate but often paints an overly optimistic picture.
• Geometric (or annualised) average: The compounded growth rate over time. This is the figure that truly matters.

So when people talk about “average returns”, they’re always referring to the geometric or annualised version, the one that reflects how your money actually grows over time.

The historical average

History gives us useful clues about what to expect from investing, even if it can’t offer guarantees. Let's take a look at different markets and their historical returns.

US stocks as a benchmark

The US stock market, often measured by the S&P 500, has delivered an average return of about 10% per year over nearly a century. Once you adjust for inflation, that’s around 6 to 7% in real terms. In other words, your purchasing power grew by roughly that amount each year on average.

Global stock markets

Looking beyond the US, the MSCI World index, which tracks 23 developed countries, tells a similar story. Over the long term, it has returned around 7% to 9% per year before inflation, or roughly 3 to 5% after inflation.

Of course, not every decade looks the same. The 1980s and 2010s were fantastic for investors. The 1970s and early 2000s, not so much. But if you stretch your time horizon to 20 years or more, these ups and downs smooth out. The longer you stay invested, the closer your results tend to align with the historical averages.

Why returns fluctuate

The “average” return makes investing look calm and predictable. In reality, it’s not at all like that. In 2022, global stocks dropped nearly 20%. And in 2023, they bounced back sharply. Some years deliver +30% gains, while others fall −15% or more.

If you invest for just a few years, those swings can make or break your returns. But when you invest for decades, the short-term noise fades away. Compounding takes over, and your patience becomes the most powerful factor driving your wealth. In the end, the “average return” isn’t a promise, it’s a reflection of what tends to happen when you stay invested through both the good years and the bad.

Nominal vs real returns

When you hear that “stocks return 7 to 10% per year”, that figure is almost always nominal. It doesn’t take inflation into account. But as a long-term investor, what really matters is the real return, which shows how much your purchasing power actually increases.

Let’s break it down:

• Nominal return: your investment’s growth before accounting for inflation.
• Real return: your growth after adjusting for inflation.

For example, imagine your portfolio grows by 8% in a year, but inflation is 3%. Your real gain is only 5%, because prices around you have risen.

This distinction matters a lot, especially for investors. In most European countries, inflation quietly erodes the value of your euros over time. A coffee that costs €3 today might cost €4 in ten years. So if your money just sits in a savings account earning 0.5%, you’re effectively losing purchasing power every year.

Investing helps your money outpace inflation. That’s why even a modest real return of 3% to 5% per year can make a big difference over decades.

The tale of two stocks: Nvidia and Wirecard

Nothing illustrates the power, and danger, of individual stocks better than two stories and how returns can fluctuate massively.

Nvidia

Imagine investing in Nvidia ten years ago, when it was mostly known for gaming graphics cards. With the AI revolution, Nvidia became the most valuable semiconductor company in the world. From 2015 to 2025, Nvidia’s stock price rose by over 10,000%. A €1,000 investment back then would now be worth more than €100,000.

Stories like this fuel dreams of picking “the next Nvidia”. And yes, a small number of stocks have created most of the stock market’s total wealth.

Wirecard

Then there’s Wirecard, once a German fintech darling. It joined the DAX 30 index and was worth tens of billions. In 2020, it collapsed into one of Europe’s biggest corporate scandals after revealing a €1.9 billion accounting hole. Its stock went from €190 to nearly €0 within months. Investors lost almost everything.

This contrast is why stock picking is so risky: it’s nearly impossible to know which company will become Nvidia and which one will become Wirecard.

Why index investing works so well

When you invest in an index fund or ETF, you don’t have to guess. You automatically own a small piece of hundreds or even thousands of companies including the next Nvidia, and excluding the risk of a total loss like Wirecard.

Here’s why it works

• Winners drive returns. In any given decade, a few big companies (like Apple, Microsoft, Nvidia) generate most of the market’s growth.
• Losers disappear quietly. When a company like Wirecard fails, it’s automatically replaced in the index by another, healthier one.
• You never miss the next big thing. You’re guaranteed to own it when it rises.
• No stress, no guessing. You benefit from capitalism’s growth, not from prediction.

This is why we advocate for broad global ETFs because the index already captures the average of all winners and losers.

Accumulating funds are best

Many investors focus only on price growth, but dividends play a huge role in long-term returns. Historically, dividends and their reinvestment have accounted for 30% to 40% of total stock market gains. Ignoring them means missing out on a big part of how wealth actually grows.

When you invest in an accumulating fund, all the dividends paid by the companies in the fund are automatically reinvested. Instead of the cash landing in your account, it buys you more shares of the fund. This might sound small, but it has a powerful effect over time: every new share you own generates even more dividends, which then buy more shares, and so on. That’s compounding at work.

Why this matters especially in Belgium

There’s an extra benefit for Belgian investors. Belgium taxes dividends at 30%, which means that if your fund distributes dividends directly to you, you’ll lose a third of that income immediately to taxes. But with accumulating funds, those dividends are reinvested inside the fund rather than paid out. Because you never “receive” them, you don’t pay the 30% dividend tax at that point. Your money keeps working for you instead of going to the tax office.

Things to consider when investing in Belgium

When you invest, it’s not just about what the markets return, it’s about what actually ends up in your pocket. In Belgium, a few rules and taxes can make a difference to your net returns. Here’s what you should know.

Dividend tax

Whenever a fund pays out dividends, Belgium takes a 30% cut. That’s a big chunk gone. Accumulating ETFs avoid this tax because they reinvest dividends inside the fund instead of paying them out. You don’t “receive” the dividends, so you don’t pay the tax at that point. It’s a small structural choice that can make a big difference over time.

Capital gains tax

From 1 January 2026, Belgium a capital gains tax of 10% on financial assets will come into effect. The exact details are still being finalised, but in essence, profits from your investments may become taxable, with some exemptions. The benefits of global diversification and compounding will remain strong.

Transaction tax (TOB)

Each time you buy or sell an ETF, you pay a small transaction tax ("beurstaks" or "taxe boursière"). Depending on the product, the rate ranges from 0.12% to 1.32%. This means frequent trading eats into your returns. Buying once and holding for the long term is not just easier, it’s cheaper too.

Platform and fund fees

Every euro you pay in fees is a euro that doesn’t compound. So keeping costs low matters. Look for ETFs with a total expense ratio (TER) below 0.3%. And remember, the platform you use also charges fees.

How to make the “average” work in your favour

You don’t need to predict which company will win or when the next crash will come. The key is to stay consistent and let averages do the heavy lifting.

• Think long-term. Give your money 15–20 years to grow.
• Diversify globally. Don’t just invest in Belgian or European companies, own a bit of everything.
• Choose accumulating ETFs. Avoid dividend taxes and benefit from automatic reinvestment.
• Automate your contributions. Investing monthly smooths out the ups and downs of the market.
• Ignore the noise. Headlines come and go, but your long-term average return keeps working quietly in the background.

The “average return of stocks” isn’t about guessing what happens next year. It’s about understanding what’s likely to happen over decades. Historically, global stocks have rewarded patient investors with around 4–5% real growth per year after inflation and costs. That’s enough to double your purchasing power every 15 years, build wealth steadily, and protect yourself from inflation, all without gambling or guessing.

How Curvo makes good investing easy

At Curvo, we built the app we wished existed when we started investing in Belgium. We wanted the simplicity of long-term, globally diversified investing, without the paperwork, tax confusion, or high broker fees.

Here’s how Curvo helps you:

• Tax-friendly portfolios. All portfolios are built with accumulating funds that automatically reinvest dividends, helping you avoid the 30% dividend tax.
• Low-cost, diversified funds. You invest in thousands of companies around the world through high-quality index funds with minimal fees.
• Automatic monthly investing. You set an amount, and Curvo invests it for you every month. No manual trades or timing the market.
• No transaction fees. Unlike brokers, there’s no fee per trade. Every euro you deposit gets invested.
• Built for Belgians. Curvo handles the local specifics, from transaction taxes to fund selection, so you can focus on your goals instead of the admin.

Curvo turns all these “things to consider” into things you no longer need to worry about. You invest monthly, stay diversified, and let time and compounding do the work.

Discover how Curvo works.

Summary

History shows us that patient investors who stay diversified tend to come out ahead. The average return isn't exciting, it's not flashy, but it's reliable. And when you compound it over 20 or 30 years, it turns modest monthly investments into real wealth.

The key is to remove the friction. Automate your investing. Choose low-cost, tax-friendly funds. Ignore the headlines. Let compounding do its job.

For Belgian investors, that means understanding the local tax rules and structuring your investments accordingly. Or you can skip the homework and let Curvo handle it for you, so you can focus on living your life instead of managing your portfolio.