Real Returns Since 1802

$1 Invested (Inflation-Adjusted) · What are real returns? · Source: Jeremy Siegel, Stocks for the Long Run (6th ed., 2022) + Shiller Data

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1802 – 2024

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New here? The answers Prof. Rosu's 8 key questions about this chart. Then try to see what $10,000 would be worth today, and to understand why time horizon changes everything. Hover over any button for a tooltip explanation.

8 Key Questions

1802–2024

Prof. Rosu's framework for understanding 220+ years of financial data. Based on HEC Paris course: Financial Markets and Asset Pricing.

Stocks represent ownership in businesses that generate real economic value. Stockholders bear the most risk — they are last in line in bankruptcy — so they demand a higher return as compensation. This extra return above the risk-free rate is called the Equity Risk Premium (ERP). Over 1802–2021, stocks returned ~6.9% real vs ~3.6% for bonds — a premium of ~3.3% per year.

✦ Equity Risk Premium ≈ 3–4% per year (real)

Era Boundaries — Academic Rationale:

1802 — First reliable US financial data (Siegel's starting point)

1871 — Shiller's data begins; post-Civil War industrialization; railroads transform economy

1926 — CRSP data begins; modern corporate finance era; Federal Reserve operational

Sources: Prof. Rosu, HEC Paris · Jeremy Siegel, Stocks for the Long Run (6th ed., 2022) · Mehra & Prescott (1985) · Robert Shiller, Yale data · Dimson, Marsh & Staunton, Triumph of the Optimists (2023)