Average Stock Market Returns
These long-run averages are most useful when you pair them with the investment calculator, the compound interest calculator, and the practical reality check in why your investment account is down. For beginners choosing what to actually buy, the next logical pages are best all-in-one ETFs in Canada and how to start investing.
| Market | Annualized Return | Time Period |
|---|---|---|
| S&P/TSX Composite | 9.3% | 1956-2025 |
| S&P 500 (USD) | 10.5% | 1926-2025 |
| MSCI World (USD) | 8.9% | 1987-2025 |
| Balanced Portfolio (60/40) | 7.5% | 1926-2025 |
These are nominal returns (before inflation). Real returns after inflation are typically 3-4% lower.
Canadian Market (S&P/TSX Composite)
Historical Annual Returns
| Period | Annualized Return |
|---|---|
| 1 year (2025) | +14.2% |
| 5 years (2021-2025) | +9.8% |
| 10 years (2016-2025) | +8.5% |
| 20 years (2006-2025) | +7.2% |
| 30 years (1996-2025) | +8.9% |
Year-by-Year Returns (Recent)
| Year | S&P/TSX Return |
|---|---|
| 2025 | +14.2% |
| 2024 | +17.4% |
| 2023 | +11.7% |
| 2022 | -5.8% |
| 2021 | +25.1% |
| 2020 | +5.6% |
| 2019 | +22.9% |
| 2018 | -8.9% |
| 2017 | +9.1% |
| 2016 | +21.1% |
Best and Worst Years
| Category | Year | Return |
|---|---|---|
| Best year | 1979 | +44.8% |
| Worst year | 2008 | -33.0% |
| Average positive year | — | +16.5% |
| Average negative year | — | -12.3% |
US Market (S&P 500)
Historical Annual Returns
| Period | Annualized Return (USD) |
|---|---|
| 1 year (2025) | +18.5% |
| 5 years (2021-2025) | +12.3% |
| 10 years (2016-2025) | +13.1% |
| 20 years (2006-2025) | +10.2% |
| 30 years (1996-2025) | +10.8% |
Year-by-Year Returns (Recent)
| Year | S&P 500 Return (USD) |
|---|---|
| 2025 | +18.5% |
| 2024 | +23.3% |
| 2023 | +26.3% |
| 2022 | -18.1% |
| 2021 | +28.7% |
| 2020 | +18.4% |
| 2019 | +31.5% |
| 2018 | -4.4% |
| 2017 | +21.8% |
| 2016 | +12.0% |
Global Diversified Portfolio
Using a global all-in-one ETF (like XEQT or VEQT):
| Period | Approximate Return |
|---|---|
| 5 years | 10-12% |
| 10 years | 9-11% |
| 20 years | 8-10% |
| 30+ years | 8-10% |
Global diversification typically provides:
- Lower volatility than any single country
- Exposure to different economic cycles
- Protection if one market underperforms
Returns After Inflation
Real returns (adjusted for inflation) are what actually grows your purchasing power:
| Market | Nominal Return | Inflation | Real Return |
|---|---|---|---|
| S&P/TSX | 9.3% | 3.0% | ~6.3% |
| S&P 500 | 10.5% | 3.0% | ~7.5% |
| Bonds | 5.0% | 3.0% | ~2.0% |
| Cash/GICs | 3.5% | 3.0% | ~0.5% |
Over 30 years, a 6% real return turns $10,000 into $57,400 in today’s dollars.
Return Variability
The “average” return is misleading because returns vary wildly:
| S&P 500 Returns | Frequency |
|---|---|
| +20% or more | 34% of years |
| +10% to +20% | 20% of years |
| 0% to +10% | 15% of years |
| -10% to 0% | 18% of years |
| -10% or worse | 13% of years |
Key insight: The market returns ~10% “on average” but almost never returns exactly 10% in any given year.
Sequence of Returns Example
Both portfolios average 8% over 4 years, but end values differ:
Portfolio A:
| Year | Return | End Value |
|---|---|---|
| Start | — | $100,000 |
| Year 1 | +20% | $120,000 |
| Year 2 | +15% | $138,000 |
| Year 3 | -5% | $131,100 |
| Year 4 | +2% | $133,722 |
Portfolio B:
| Year | Return | End Value |
|---|---|---|
| Start | — | $100,000 |
| Year 1 | -5% | $95,000 |
| Year 2 | +2% | $96,900 |
| Year 3 | +15% | $111,435 |
| Year 4 | +20% | $133,722 |
Same average. Same ending value. But very different ride.
What Returns Should You Expect?
Conservative Estimates
For financial planning, use lower estimates than historical averages:
| Asset Class | Planning Estimate |
|---|---|
| Equities | 6-7% nominal |
| Bonds | 3-4% nominal |
| 60/40 Portfolio | 5-6% nominal |
This accounts for:
- Future returns may be lower than historical
- Your personal returns include fees
- Market timing mistakes
How to Think About Returns
- Long-term only: 8-10% applies over 20-30+ years
- Expect volatility: Individual years can be +30% or -30%
- Stay invested: Most gains come from a few good days
- Fees matter: 2% fees cut your returns significantly
Impact of Fees
| MER | Gross Return | Net Return | 30-Year Growth ($100k) |
|---|---|---|---|
| 0.2% | 8% | 7.8% | $915,000 |
| 0.5% | 8% | 7.5% | $872,000 |
| 1.0% | 8% | 7.0% | $761,000 |
| 2.0% | 8% | 6.0% | $574,000 |
A 2% MER costs you $341,000 over 30 years on a $100,000 portfolio.
Missing the Best Days
Staying invested matters more than timing:
| Strategy | 20-Year Return (S&P 500) |
|---|---|
| Stay invested | +585% |
| Miss 10 best days | +270% |
| Miss 20 best days | +135% |
| Miss 30 best days | +40% |
The best days often follow the worst days. Exiting during downturns means missing the recovery.