Below is the graph of S&P 500 returns which I have gotten from the site www.simplestockinvesting.com
From the chart above, it can be seen that the total average return from 1950 till 2008 was 10.76%. This percentage takes into consideration dividends plus the capital gain (price change).
But if the returns are adjusted for inflation then we get an average total return of 6.76%
Not too bad of an index to have. Because most of the stock analysts can never even beat the S&P 500 index over the long run. However, everything depends on your risk aversion. I would prefer just holding small cap value stocks index. Below you can get into more detailed historical return for S&P 500 index
S&P 500 is the index of the prices of the 500 large-cap common stock companies actively traded in the United States. This index has been followed since 1957. This index is the second most followed index after Dow Jones Industrial Average. Below I will present several tables in which you will be able to see the historical returns for S&P 500 Index
Historical returns for S&P 500 since 1926
Here is a more recent table of historical returns for S&P 500 since 1988
Historical returns for S&P 500 Index has varied very much over the years. Overall, S&P 500 can serve as a pretty good representation of an overall market. So when speaking of the market index, it can very well be assumed that it is being spoken of the S&P 500 index.
The S&P 500 index has been quite volatile over the years however it usually averages on a pretty good return. 2009 turned out to be a good year for the index and it earned a surprising 26.45%. And in the past 20 years the average return for S&P 500 has been around 10%.