How Much Can You Lose Investing in the S&P 500? (Worst-Case Scenarios)
The S&P 500 has averaged roughly 10% per year since 1926. But “average” doesn’t mean “guaranteed.” The worst single year lost 43.8%. The worst decade gave you essentially nothing. And at least once in your investing lifetime, you will watch your portfolio drop 40–50%. Here’s exactly how bad it can get — and the one stat that makes it all worth it.
Yes, you can lose money in the S&P 500
The S&P 500 is often described as the safest way to invest in stocks. And over the long term, it has been extraordinary — roughly 10% average annual returns since 1926. But “average” hides a lot of pain. In any given year, the S&P 500 has roughly a 25% chance of losing money.
Here are the worst individual years in S&P 500 history:
| Year | Return | What happened |
|---|---|---|
| 1931 | -43.8% | Great Depression |
| 2008 | -36.6% | Financial crisis |
| 1937 | -35.3% | Recession within Depression |
| 1974 | -25.9% | Oil crisis, stagflation |
| 2002 | -21.6% | Dot-com bust, year 3 |
| 2022 | -18.1% | Inflation, rate hikes |
In the worst single year, you would have lost nearly 44% of your portfolio. That’s $44,000 on a $100,000 investment — gone in 12 months. Use our stock return calculator to see exact returns for any time period.
Worst multi-year stretches
Single bad years are painful. Multi-year losing stretches are psychologically brutal. Here are the worst rolling periods for the S&P 500:
If you invested at the absolute worst moment in 2000 and checked 10 years later, you’d have essentially broken even (before inflation). That’s a decade of zero real returns. It’s the strongest argument for having a long time horizon.
The reassuring flip side
Here’s the stat that matters most: the S&P 500 has never had a negative 20-year rolling return in its history. Not once. Not even if you invested at the peak of 1929, right before the Great Depression.
| Holding period | Chance of positive return | Worst outcome | Best outcome |
|---|---|---|---|
| 1 year | ~74% | -43.8% | +52.6% |
| 5 years | ~88% | -28% | +28.6%/yr |
| 10 years | ~95% | -1% | +20.1%/yr |
| 20 years | 100% | +6.4%/yr | +17.9%/yr |
Time transforms the S&P 500 from a volatile gamble into a reliable wealth-builder. At 1 year, it’s a coin flip with a slight edge. At 20 years, it has never lost money.
Maximum drawdowns: peak-to-trough pain
A “drawdown” measures how far the index fell from its all-time high before recovering. This is arguably the most important risk metric because it measures the worst pain you could have experienced:
- Great Depression (1929–1932): -86% drawdown. The extreme outlier.
- Financial crisis (2007–2009): -56.8% drawdown. The worst in modern times.
- Dot-com bust (2000–2002): -49.1% drawdown. Nearly two and a half years of falling prices.
- COVID crash (2020): -33.9% drawdown. The fastest crash and fastest recovery in history.
- 2022 bear market: -25.4% drawdown. Driven by inflation and aggressive rate hikes.
If you’re investing in 100% stocks, you should mentally prepare for a 40–50% drawdown at some point in your investing lifetime. It will happen. The question is whether you’ll have the discipline to hold through it. Our crash guide covers exactly how to prepare.
What about with monthly contributions?
All the above assumes a single lump-sum investment at the worst possible moment. In reality, most people invest monthly via dollar-cost averaging. This dramatically improves worst-case outcomes because you’re buying shares at lower prices during the downturn.
Even someone who started investing $500/month into the S&P 500 on October 9, 2007 (the absolute worst day to start) would have had a positive return by 2012 — just 5 years later — thanks to the cheap shares they accumulated during the crash.
Test any scenario with real data
Pick any stock or ETF, choose any start date, and see exactly what your investment would be worth today — including dividends and crash periods.
Open stock return calculator →How to manage S&P 500 risk
- Extend your time horizon: At 20+ years, the S&P 500 has a perfect track record. The longer you hold, the lower your risk.
- Add bonds as you age: A 60/40 portfolio fell “only” 35% in 2008 vs 57% for 100% stocks. Use our retirement calculator to model different allocations.
- Automate contributions: DCA through crashes automatically improves your returns. Set it and forget it.
- Keep an emergency fund: 3–6 months of expenses in cash prevents forced selling during downturns.
- Don’t check daily: The S&P 500 is negative on roughly 46% of individual trading days. Daily monitoring creates unnecessary panic.
Historical S&P 500 data sourced from public market records. All returns are nominal and do not account for inflation unless stated. Past performance does not guarantee future results. This article is for educational purposes only and does not constitute financial advice.