Investors often have expectations of real annual returns greater than 7 percent — the areas in green. But over 20 years or longer, rates that high are rare.

After 60 or 70 years, returns are relatively stable, but this time frame is longer than the relevant horizon for many retirement plans.

Outlined squares show investment returns after 20 years

An example If you invested money at the end of 1930 and withdrew it in 1950, the stock market would have returned about 2 percent a year after inflation and taxes. People who invested after the crash in 1929 in hopes of a quick rebound had to wait many years for their investments to pay off.

Average real annual return Includes dividends, average taxes and fees. Adjusted for inflation. This chart at right shows annualized returns for the S.& P. 500 for every starting year and every ending year since 1920 — nearly 4,000 combinations in all. READ ACROSS THE CHART to see how money invested in a given year performed, depending on when it was withdrawn.

In Investing, It’s When You Start

And When You Finish

WORST 20 YEARS

1961-1981

–2.0% a year

2ND BEST

20 YEARS

1979-99

+8.2% a year

BEST 20 YEARS

1948-68

+8.4% a year

The Standard & Poor’s 500-stock index has posted double-digit gains for the second year in a row. But the index is still below where it was in early 1999. So what is the proper perspective? Ed Easterling, who runs an investment management and research firm from Corvallis, Oregon, faced similar questions a decade ago. In the summer of 2001, Mr. Easterling had a debate with a client about whether investors should expect to achieve long-term average returns in the future. At the time, the average individual investor expected that the stock market would return about 10 percent a year over the next 10 to 20 years — or about 7 percent after inflation — according to surveys by the University of Michigan’s Survey Research Center, as well as UBS and Gallup.