2021 Returns For The S&P 500, Dow Jones Industrial Average, NASDAQ

2021 was another fantastic year for the stock market. Here are the 2021 returns for the S&P 500, Dow Jones Industrial Average, and NASDAQ.

The S&P 500 returned 26.61% in 2021. Including dividends, the s&P 500 returned 28.41%.

The Dow Jones Industrial Average returned 18.65% in 2021. Including dividends, the Dow Jones Industrial Average returned 20.94%.

The NASDAQ returned 20.73% in 2021. Including dividends, the NASDAQ returned 22.17% in 2021.

2021 Returns: Another Stellar Year For Stocks

As you can see from the returns, 2021 was a fantastic year for stock investors. However, after three years in a row of way above average gains, investors should be more cautious in 2022. Stock market valuations are expensive in 2022, with the S&P 500 trading at around 30X.

As a result, expect much lower returns in the major stock market indices in 2022. I expect the S&P 500 to return closer to 5% in 2022. This is lower than the guaranteed I bond return of 7.12%.

I'm much more bullish on real estate in 2022 and expect between 8% – 10% returns for the median home price. Further, I expect coastal city real estate to perform very strongly as people flock back to big cities.

Expect to see 5% – 10% corrections in the stock market in 2022 as volatility gets heightened. With a tightening Fed and slowing corporate profit growth, stock investors should be prepared for a bump ride.

My 2022 stock market forecast is not very exciting. I only expect to see a ~5% return.

Historical Returns Of The S&P 500 - 2021 returns for S&P 500, NASDAQ, Dow Jones

Major Hedge Fund Returns Versus 2021 Index Returns

In comparison, here are the returns from major hedge funds in 2021. As you can see, most hedge funds several underperformed the 2021 returns for the S&P 500, Dow Jones, and NASDAQ.

As retail investors, the key is to invest most of your money in low-cost index funds for the long term. Paying a hefty fee for underperformance is a sure fire way slow down your pay to financial independence.

Hedge funds make a lot of money for themselves. As a result, this drags down performance for its investors. It's pretty embarrassing how poorly hedge funds perform in a bull market. Hopefully, they will perform much better in a bear market given their hedges.

Returns for major hedge funds in 2021

Please also check out the 2023 Stock Market Forecasts and read my 2023 Housing Price Predictions.

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About the Author: 

Sam worked in finance for 13 years. He received his undergraduate degree in Economics from The College of William & Mary and got his MBA from UC Berkeley. In 2012, Sam was able to retire at the age of 34 largely due to his investments that cover his desired lifestyle. He spends time playing tennis, taking care of his family, and writing online to help others achieve financial freedom too.

He started Financial Samurai in 2009 and has grown it to be one of the largest independently owned personal finance sites in the world with over 1 million organic visitors a month. Join 55,000+ others and sign up for his free weekly newsletter if you want to experience financial freedom sooner, rather than later.

2021 S&P 500, Dow Jones Industrial Average, NASDAQ Returns is an FS original post.