Average Stock Market Returns Canada | Historical Data

The stock market does not return 10% every year — it returns 10% on average over decades, with enormous variation in between. In 2021, the S&P/TSX Composite returned over 25%. In 2022, it fell nearly 6%. Understanding what long-run averages actually mean, and what they do not mean, is one of the most important distinctions a Canadian investor can make before committing money to the market.

This page covers historical average returns for the Canadian market (S&P/TSX Composite), the US market (S&P 500), and globally diversified portfolios. It also explains how inflation, fees, and sequence of returns affect what you actually keep — because the headline number and your real-life experience can be very different things.

For practical tools, pair this data with the investment calculator and compound interest calculator. For context on why your portfolio looks different from these averages right now, see why your investment account is down.

Long-Run Averages: The Headline Numbers

Over multi-decade periods, equity markets have rewarded patient investors significantly. The figures below are total returns including dividends reinvested — dividends account for roughly a third to half of long-run equity returns, so stripping them out would paint a misleading picture.

These are nominal returns — before inflation. Real returns after inflation are typically 3–4 percentage points lower, which is what actually grows your purchasing power over time.

Canadian Market: S&P/TSX Composite Returns

The S&P/TSX Composite Index tracks the largest publicly traded companies on the Toronto Stock Exchange. Unlike the S&P 500, which is diversified across eleven sectors, the TSX is heavily weighted toward three sectors: financials (banks and insurers), energy (oil, gas, pipelines), and materials (mining, gold). Together these three sectors account for roughly 60% of the index. This concentration means Canadian market returns are significantly influenced by commodity prices and the health of the Canadian banking sector.

Historical Returns by Period

Note that the 20-year figure (7.2%) is dragged down by the 2008–09 financial crisis, which hit Canada’s bank-heavy index particularly hard. The 30-year number recovers because it includes the strong bull market of the 1990s.

Year-by-Year Returns (2016–2025)

The range in the table below illustrates why single-year returns are nearly useless for planning purposes. A 25-point swing between 2021 and 2022 is not unusual — it is historically normal.

Best and Worst Years

The TSX has historically produced a positive return in roughly 70% of calendar years. In other words, about 3 years in every 10 will be negative — which is why a 10-year investment horizon is considered a minimum for pure equity exposure. For more on how the TSX is structured, see our guide to the TSX Composite Index.

US Market: S&P 500 Returns

The S&P 500 has outperformed the TSX over most multi-decade periods, largely because the US market has higher exposure to technology and healthcare — two of the strongest-performing sectors of the past 30 years. Canadian investors accessing the S&P 500 must factor in currency risk: returns are in USD, so a rising Canadian dollar reduces what you take home even when the US market goes up.

Historical Returns by Period

The 10-year figure (13.1%) reflects an unusually strong period for US tech stocks. It is unlikely to be a reliable guide to the next 10 years.

Year-by-Year Returns (2016–2025)

The 2022 drawdown of -18.1% was the worst year since the 2008 financial crisis, driven by rapid interest rate hikes from the US Federal Reserve. It followed a +28.7% return in 2021. This kind of reversal is the rule, not the exception.

Global Diversified Portfolio Returns

A globally diversified equity portfolio — such as one built with XEQT or VEQT — holds stocks across Canada, the US, international developed markets (Europe, Japan, Australia), and emerging markets (China, India, Brazil). This diversification smooths out the volatility of any single country and reduces the risk that your returns depend heavily on whether one economy is having a good decade.

Global diversification does not guarantee higher returns than the US alone — over the past decade, the US significantly outperformed international markets. But it reduces the risk of a concentrated bet on any single country or sector. Most Canadian financial planners recommend a globally diversified equity allocation as the core of a long-term portfolio.

Real Returns: What Inflation Takes Away

Nominal returns are what the market delivers. Real returns are what you can actually buy with the proceeds. Canada’s long-run inflation rate has averaged around 3% annually, which means the nominal 9.3% average from the TSX translates to roughly 6.3% in real purchasing power. Over 30 years, that difference compounds dramatically.

Over 30 years, a 6% real return turns $10,000 into $57,400 in today’s purchasing power. At 0.5% real (cash or GICs), that same $10,000 becomes only $11,600. Keeping too much money in cash or low-yield savings is not “safe” — it is a near-certain way to lose ground to inflation over long periods.

How Variable Are Returns Year to Year?

The 10% average is real, but it almost never shows up in any given year. The distribution below shows just how rarely the market returns anything close to its historical average.

The market returns 20% or more in more than one out of every three years — but it also falls 10% or more in roughly one in eight years. Understanding this distribution helps investors stay calm during downturns and avoid overconfidence during strong runs. For a beginner’s grounding in how markets actually work, see stock market basics for Canadians.

Sequence of Returns: Why the Order Matters

Two investors can earn the exact same average return over a period but end up with very different outcomes, depending on the order in which those returns arrive. This is called sequence of returns risk and it matters most for investors who are withdrawing money (like retirees) rather than those who are still accumulating.

Both portfolios below average 8% per year over four years and end at the same value. But Portfolio B (which falls first) spends most of the period below its starting value — which would be devastating if you were selling units each year in retirement.

Portfolio A (gains come early):

Portfolio B (losses come early):

For accumulators still working and contributing monthly, sequence of returns risk actually works in your favour — market dips mean you buy more units at lower prices. The risk flips when you start drawing down.

What Return Should You Plan With?

Historical averages are backward-looking. Using 10% in a retirement projection assumes the next 30 years look exactly like the last century — a bold assumption. Most Canadian financial planners and regulators recommend using more conservative estimates.

The lower estimates account for the possibility that future returns are below historical ones, the drag of fees, and the reality that most investors underperform the index because they buy and sell at the wrong times.

The Impact of Fees on Long-Term Returns

The management expense ratio (MER) of your investments is one of the few factors entirely within your control. A difference of 1–2% per year sounds small but compounds into enormous differences over decades, because fees are charged on your entire portfolio balance, not just your gains.

A 2% MER costs approximately $341,000 over 30 years on a $100,000 starting portfolio — more than three times the original investment, paid in fees. This is why low-cost index ETFs have become the dominant recommendation for long-term Canadian investors. See best all-in-one ETFs in Canada for options with MERs under 0.25%.

The Cost of Missing the Best Days

Investors who sell during market downturns and wait to re-enter frequently miss the strongest recovery days. The problem is that the best days and worst days are clustered together — major rallies often occur during or immediately after periods of peak fear.

Missing just the 10 best trading days in a 20-year period cuts your return by more than half. Since those days are unpredictable, market timing consistently destroys wealth for most investors. Staying invested through volatility is not a passive choice — it is the active discipline that separates long-term wealth builders from those who earn far less than the market average.

Key Takeaways for Canadian Investors

The 9–10% historical equity return is real, but context matters:

• The TSX is sector-concentrated. Roughly 60% of the index is financials, energy, and materials. Global diversification reduces this risk without sacrificing long-term returns.
• Use conservative estimates for planning. Model at 5–7% nominal, not 10%. You will not be disappointed if markets outperform, and you will not be caught short if they do not.
• Fees compound against you. A 0.2% MER ETF and a 2.0% MER mutual fund holding the same index will have radically different outcomes over 30 years.
• Currency matters for US holdings. S&P 500 returns in CAD differ from USD returns. In years where the Canadian dollar strengthens, your USD gains shrink.
• Stay invested. Missing the best days hurts more than riding out the worst.

Related Resources

• Investment Calculator
• Compound Interest Calculator
• Rule of 72 Calculator
• Best All-in-One ETFs in Canada
• XEQT vs VEQT
• TSX Composite Index Guide
• Stock Market Basics for Beginners