Everyone talks about "set it and forget it" like investing is some peaceful Sunday drive through the countryside. Honestly, if you've been looking at voo returns by year, you know it’s more like being strapped into a wooden rollercoaster built in 1920. One minute you’re peaking at the top of a 30% gain, and the next, your stomach is in your throat because the market decided to shed a fifth of its value in a single trip around the sun.
The Vanguard S&P 500 ETF (VOO) is basically the gold standard for tracking the largest 500 companies in the U.S. It’s cheap. It’s efficient. But man, it is rarely "average." People love to quote that 10% historical average for the S&P 500. It’s a great number for a spreadsheet. In reality? The market almost never actually returns 10% in a single calendar year. It’s usually either way better or way worse.
The Wild Reality of VOO Returns by Year
Let’s look at the actual math because the numbers don't care about our feelings. If you go back to the fund's inception in 2010, the path has been anything but a straight line.
In 2023, VOO came roaring back with a total return of about 26.3%. That felt like a miracle after the absolute bloodbath of 2022, where the fund dropped roughly 18.1%. Think about that for a second. If you had $100,000 at the start of 2022, you watched $18,000 vanish. Then, just as you were probably considering pulling your money out and burying it in the backyard, 2023 handed you a massive gain. This is the psychological tax of index investing. You have to be willing to feel like a loser for 12 months to earn the right to feel like a genius for the next 24.
The "boring" years are actually the outliers.
Look at 2017. VOO was up 21.8%. Then 2018 rolled around and it dipped 4.5%. It wasn't a crash, just a persistent, annoying leak that frustrated investors all year. Then 2019 happened—a staggering 31.5% gain. Nobody predicted that. Not the guys on CNBC, not the "finfluencers" on TikTok, and certainly not the gloom-and-doom prophets on Twitter.
Why 2022 Was Such a Wake-Up Call
We got spoiled. Between 2019 and 2021, the returns were frankly absurd. We had 31.5%, then 18.4% in 2020 (despite a literal global shutdown), and then another 28.7% in 2021.
That three-year run made people think investing was easy. It made people think VOO was a savings account that just happened to pay 20%. 2022 was the market’s way of reminding us that "risk premium" is called a risk for a reason. High inflation, rising interest rates, and geopolitical tension hit the "Magnificent Seven" stocks—the Apples and Microsofts that dominate VOO's weighting—right in the teeth.
The Composition Problem
You’ve gotta realize that VOO is a market-cap-weighted fund. This is a fancy way of saying the biggest companies have the most influence. When you buy VOO, you aren't buying equal slices of 500 companies. You’re buying a massive chunk of tech giants and a tiny sliver of everything else.
If Nvidia has a bad day, VOO has a bad day. If the iPhone sales slump, VOO feels it.
Back in the early 2010s, the concentration wasn't quite this extreme. Today, the top ten holdings represent about 30% of the entire fund. This explains why voo returns by year have become increasingly volatile. We’re basically betting on the continued dominance of American Big Tech. If they win, we win big. If they stumble, the "diversified" index fund doesn't feel very diversified.
Deciphering the Annual Performance (2011–2024)
If we sit down and actually list out what happened, the narrative becomes clearer.
- 2011: A flat 1.9%. Boring. Frustrating.
- 2012: Up 16.0%. The post-recession recovery was in full swing.
- 2013: A massive 32.4%. This was the year everyone regretted sitting in cash.
- 2014: Up 13.5%. Solid, steady.
- 2015: 1.3%. Another year where it felt like your money was stuck in metaphorical traffic.
- 2016: 11.9%.
- 2017: 21.8%. The "Goldilocks" economy.
- 2018: -4.5%. The first negative year since the fund really took off.
- 2019: 31.5%.
- 2020: 18.4%. Remember the March crash? The fact that this year ended green is still a miracle of monetary policy.
- 2021: 28.7%. The stimulus-fueled rally.
- 2022: -18.1%. The reality check.
- 2023: 26.3%. The AI-driven comeback.
- 2024 (mid-year/ongoing): While the final tally isn't in for the full history, the momentum has largely stayed positive despite constant recession fears.
The takeaway here isn't that you should try to time these jumps. It’s that if you missed just the ten best days in any of those years, your total return would be cut nearly in half.
The Dividend Factor People Forget
When people Google voo returns by year, they often just look at the price chart. That’s a mistake. You have to look at "Total Return."
VOO pays a dividend, usually somewhere around 1.3% to 1.5%. In a year like 2015 where the price only moved 1%, that dividend was basically your entire profit. Over a decade, reinvesting those dividends is the difference between retiring in a house and retiring in a condo.
Vanguard’s expense ratio for VOO is also a tiny 0.03%. Compared to an old-school mutual fund charging 1%, you’re keeping thousands of dollars more of those annual returns for yourself. It’s the closest thing to a free lunch in finance.
Dealing With the "Sequence of Returns" Risk
The biggest danger isn't the market going down; it's the market going down right when you need the money.
If you retired in 2021, 2022 was a nightmare. Selling shares when they are down 18% is how you run out of money. This is why looking at voo returns by year is vital for planning. You need a cash "bucket" or a bond cushion so you don't have to sell VOO during a red year.
Nuance matters here. Some experts, like those at Morningstar or Vanguard’s own research team, suggest that the next decade might not look as pretty as the last one. Why? Because valuations are high. When you pay a lot for a company's earnings today, your future returns tend to be lower. It doesn't mean the returns will be negative, but expecting 20% every year because "that's what happened in 2023" is a recipe for a broken heart.
Actionable Steps for the "VOO and Chill" Crowd
So, what do you actually do with this information?
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- Check your stomach, not your balance. If seeing a -18% year like 2022 made you want to vomit, you probably have too much money in VOO and not enough in safer assets.
- Automate the "Buy." The best way to handle the volatility of annual returns is dollar-cost averaging. Buy every month, whether the market is up 30% or down 20%. You’ll end up buying more shares when they are "on sale."
- Reinvest dividends automatically. Set your brokerage account to "DRIP" (Dividend Reinvestment Plan). This turns your VOO shares into a snowball that grows even when the market is flat.
- Ignore the 1-year window. If you need the money in less than five years, VOO is not the place for it. The annual returns are too unpredictable. Use a High-Yield Savings Account or a Money Market fund instead.
- Watch the concentration. Keep an eye on the top holdings. If you already own a lot of Apple or Microsoft stock through an employee program, realize that VOO is doubling down on those same bets.
The data shows that VOO is a powerhouse. It beats most professional fund managers over long periods. But it requires a certain level of emotional callousing. You have to accept that some years will be ugly, some will be boring, and a few will be spectacular. The only way to get the average is to stay for the whole show.
Stop obsessing over the daily ticks. Look at the annual trend, understand the volatility is the price of admission, and keep your eyes on the horizon. The math works, but only if you let it.