Average Retail Investor Returns | Lambda Finance
The average retail investor earned 15.3 percent on equity holdings in 2025. This report brings together the clearest benchmarks so you can see exactly how retail performance compares to the market and what drives the differences.
The Lambda Finance team compiled data from the DALBAR Quantitative Analysis of Investor Behavior reports through 2026, Morningstar Mind the Gap studies, J.P. Morgan retail flow analysis, and supporting Federal Reserve figures through December 2025. We focused on actual dollars invested after buys, sells, and timing effects rather than simple index returns. You will see results by time horizon, recent market years, trading frequency, and age group. These numbers give everyday investors and advisors a practical view of where behavior adds or subtracts value.
Average Retail Equity Investor Returns vs S&P 500 by Time Horizon
| Time Horizon | Retail Investor (%) | S&P 500 (%) | Gap (percentage points) |
|---|---|---|---|
| 1 Year (2025) | 15.3 | 17.9 | -2.6 |
| 5 Years (2021-2025) | 12.4 | 15.6 | -3.2 |
| 10 Years | 9.8 | 13.0 | -3.2 |
| 20 Years | 7.2 | 10.1 | -2.9 |
Retail investors trail the S&P 500 across every measured period, but the gap stays fairly steady around three points per year on average.
The data matters because small annual shortfalls compound into large differences over time. A 100,000 dollar starting investment at the 10-year retail rate grows to roughly 255,000 dollars while the same amount at the S&P 500 rate reaches about 340,000 dollars. The pattern shows that longer holding periods help narrow the gap slightly, which supports staying invested through ups and downs rather than trying to time moves.
Retail Investor Returns During Recent Market Years
| Year | Retail Investor (%) | S&P 500 (%) |
|---|---|---|
| 2022 | -21.5 | -18.1 |
| 2023 | 21.5 | 26.3 |
| 2024 | 16.5 | 25.0 |
| 2025 | 15.3 | 17.9 |
Compiled figures highlight how retail investors felt deeper losses in down years and captured less of the upside in recoveries, though 2025 showed a narrower gap thanks to strong dip buying noted in J.P. Morgan data.
These numbers matter because they illustrate the real cost of reacting to headlines. In 2024 the gap reached 8.5 points, one of the widest in the past decade according to DALBAR. The smaller 2025 difference suggests better discipline during volatility helped, yet the overall pattern still favors steady participation over frequent adjustments.
Average Returns by Trading Frequency (5-Year Annualized)
| Trading Frequency | Average Annual Return (%) |
|---|---|
| Low (fewer than 1 trade per year) | 13.8 |
| Moderate (2 to 5 trades per year) | 11.5 |
| High (more than 5 trades per year) | 8.9 |
The side-by-side view shows a clear drop in returns as trading activity rises.
This matters because each extra trade often brings higher costs and worse timing. Low-frequency investors kept closer to market returns over the past five years. Aggregated brokerage and survey data confirm the link. If your account shows frequent activity, the figures suggest reviewing whether those changes improve results or simply add friction and taxes.
Retail Investor Returns by Age Group in 2025
| Age Group | Average Return (%) |
|---|---|
| Under 35 | 14.2 |
| 35 to 54 | 15.7 |
| 55 and older | 15.9 |
Younger investors posted slightly lower returns while mid-career and older groups came closer to the overall average.
The spread matters because younger investors often experiment with individual stocks or short-term moves, as seen in FINRA surveys. Older groups tend to hold more diversified portfolios and sell less during dips. Age alone does not guarantee success, but steadier habits clearly help.
Related Resources
For context on stock market participation see our report on Percentage of Americans That Own Stocks. Teams exploring technology to improve decisions can review AI Usage in Finance or Examples of AI in Finance. For broader market trends check Global Fintech Market Size. For more on typical investor account sizes, see our Average Retail Trader Account Size.
In summary, the average retail investor earned 15.3 percent in 2025 but still trailed the S&P 500 by 2.6 points. Gaps appear across time horizons and widen with higher trading activity. Longer periods and lower frequency help close the difference. Investors who build consistent habits and avoid emotional reactions capture more of the market upside over time.
If you need a custom analysis for your own portfolio or help setting up a plan that improves on these averages, the team at Lambda Finance is ready. The data is already compiled and waiting.