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Dow Jones Historical Return Calculator

September 7th, 2020 by 
PK

On this page is a Dow Jones Industrial Average Historical Return Calculator. You can input time-frames from 1 month up to 60 years and 11 months and see estimated annualized Dow Jones Industrial returns – that is, average sequential annual returns – if you bought and held over the full time period.

Choose to adjust for dividend reinvestment (note: no fees or taxes) and inflation. The results show a measure of volatility – the monthly realized historical volatility and annual realized historical volatility. Finally, if you select an ending month in the ‘Input’ tab, DQYDJ will calculate every period ending on that month – useful for historical period comparisons.

For total returns over a particular timeframe do not use this calculator, use the Dow Jones Industrial Average Return Calculator instead.

The Dow Jones Industrial Average Historical Return Calculator

How to Use the Dow Jones Industrial Average Historical Return Calculator

There are three essential options you’ll need to think about before running. You can pick as many periods to analyze as your computer (and eyes) can handle. We suggest, however, running it multiple times.

Also note: all returns are annualized, unless otherwise noted. You can directly compare annualized results between time periods, but you will see unbelievable numbers for smaller time frames – a high monthly return looks higher when annualized!

To be clear: these are estimated annualized returns using your choices over the time-frame selected. These are not total returns.

Inputs to the Dow Jones Industrial Average Historical Return Calculator
  • Reinvest Dividends - By default, we model dividends paid and reinvested in simulated 'shares' of the Dow Jones.  We do not attempt to model taxes, fees and other costs faced by a typical investor.
  • Adjust for Inflation (CPI) - We use the CPI as our approximation for inflation. You can turn off this adjustment.
  • Detailed Results for Periods Ending - If you select this, we  add another results table with a record of all of return periods ending in the month from this menu. We can see this being valuable for round number comparisons such as 1, 5, 10, 20, or 30 year returns where you’d like to see performance ending at a definite date.
Outputs from the Dow Jones Industrial Average  Historical Return Calculator
  • Using (CPI) Inflation Adjustment - Were these results inflation adjusted?
  • Calculating Dividend Reinvestment - Do the calculated results factor in dividend reinvestment?
  • Monthly Realized Historical Volatility - For month over month periods, we have calculated the historical volatility. (See here)
  • Annual Realized Historical Volatility - Ditto for year over year results.
  • Summary Statistics - The average, median, maximum and minimum return as well as the standard deviation of returns for all of your selected periods.
  • Percentile Table - The quantile of returns for every period you selected.  The return quoted is beaten by the percentage of rolling periods in the far left column. Here's an example of an interpretation:
Reading the output table for 40 year periods, inflation adjusted, on the Dow Jones Industrial Average
Reading the output table for 40 year periods, inflation adjusted, on the Dow Jones Industrial Average

(Optional) Annualized Returns Ending... - If you selected a month in the Detailed Results pulldown, we will also show a table with exhaustive returns ending in the chosen month.  This is most popular using 'January' as an ending month with periods such as 1, 5, 10, or 20 years.

Charting Results from the Dow Jones Industrial Average Historical Return Calculator
  • The ordered sets take you from the 2nd percentile to the 98th percentile of returns 2 percent at a time
  • The tool graphs all selected time periods on the same chart.
  • To get around a hidden div quirk with Google Charts, the chart redraws each time you click the 'Chart' tab.  (Beware if you are on mobile.)

Methodology for this calculator follows the Dow Jones Industrial Average dividend reinvestment calculator.  When the underlying data updates there this tool will follow automatically.

Dow Jones Industrial Average Historical Return Calculator: a Picture of Coins in Stacks
Longer Waits, Smoother Returns!

Conclusions from the Dow Jones Industrial Average Historical Return Calculator

For all of the knocks in the financial press on price weighted indices, the market-cap weighted S&P 500 (see the S&P 500 version of the tool here) and the Dow Jones Industrial Average have performed similarly over the long term.

These deep dives in historical returns prove the old advice: the longer you wait, historically, the smoother your historical returns. A quick look at the graph shows that the historical return slope flattens as you increase the time frames.

On a practical level, money you need in the short term is best left out of equities.  However, over a longer term 30-40 year career you'll likely need to take some risks with your money exposed to the stock markets.

Do you see anything interesting in the results?  Are you surprised that the Dow Jones Industrial Average and S&P 500 have such similar results in the long term?

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