Average Stock Market Returns Canada | Historical Data

The stock market does not return the same amount every year: it earns its long-run average on average over decades, with large swings in between. The S&P/TSX Composite returned 25.1% in 2021 and -5.8% in 2022, with dividends reinvested. Understanding what long-run averages mean, and what they do not, is one of the most important distinctions a Canadian investor can make before committing money to the market.

This page covers historical returns for the Canadian market (S&P/TSX Composite), the US market (S&P 500) and a global index (S&P World). It also explains how inflation, fees and the order of returns affect what you actually keep, because the headline number and real-life experience can be very different.

It is one of the guides in our Canadian stocks hub. 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.

The Headline Numbers

The figures below are total returns: dividends reinvested, before fees and before inflation. Dividends are a large part of stock returns: in every year from 2016 to 2024 the S&P/TSX Composite’s total return beat its price-only return, by about 3 percentage points a year on average (see the table further down).

These are nominal returns, before inflation. The real (after-inflation) return is what grows your purchasing power; see the section on inflation below.

Canadian Market: S&P/TSX Composite Returns

The S&P/TSX Composite Index is the headline and broadest index for Canadian-based, TSX-listed companies, covering about 95% of the Canadian equities market. Unlike the S&P 500, which is spread across many sectors, the Canadian market is weighted heavily toward three: financials (banks and insurers), materials (mining, including gold) and energy (oil, gas, pipelines). In the iShares Core S&P/TSX Capped Composite ETF (XIC), which tracks the capped version of the index, those three sectors made up about 68% of the fund on October 7, 2026. That concentration means Canadian returns depend heavily on commodity prices and the health of the banks.

Returns by Period

Annualized total returns in Canadian dollars to December 31, 2025 (S&P Dow Jones Indices, SPIVA Canada Year-End 2025).

Year-by-Year Returns (2016 to 2025)

The range in the table below shows why single-year returns are of little use for planning. Total return includes reinvested dividends; price return leaves them out. (The 2025 price return is not shown because we could not confirm it from S&P’s own documents.)

Sources: S&P/TSX Composite factsheet (CAD) for 2016 to 2024; SPIVA Canada Year-End 2025 for 2025. Both S&P Dow Jones Indices.

Over these ten years the best year was 2025 (31.7%) and the worst was 2018 (-8.9%). Longer histories include much deeper falls, which is why a long investment horizon matters for money held entirely in stocks. 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 the past decade, in both US and Canadian dollars. Canadian investors in the S&P 500 also have currency risk: returns are earned in US dollars, so a rising Canadian dollar reduces what you get in Canadian dollars even when the US market goes up.

Returns by Period

1 to 20 years: S&P Dow Jones Indices, SPIVA U.S. Year-End 2025. 30 years: computed from Damodaran’s annual S&P 500 returns.

In Canadian dollars, the S&P 500 returned 14.7% a year over the same 10 years (SPIVA Canada). A strong decade for US technology stocks is not necessarily a reliable guide to the next 10 years.

Year-by-Year Returns (2016 to 2025)

Sources: S&P 500 factsheet for 2016 to 2024; SPIVA U.S. Year-End 2025 for 2025. Both S&P Dow Jones Indices.

The 2022 decline of -18.1% was the worst year in this table, and it followed a gain of 28.7% in 2021. Reversals like this are normal.

Global Stock Returns

A globally diversified equity portfolio, such as one built with XEQT or VEQT, holds stocks across Canada, the US, other developed markets (Europe, Japan, Australia) and emerging markets. This reduces the risk that your returns depend heavily on one economy having a good decade. The S&P World index covers developed-market stocks worldwide:

Source: S&P Dow Jones Indices, SPIVA Canada Year-End 2025.

Global diversification does not guarantee higher returns than the US alone: over the past decade the S&P 500 beat the world index. But it reduces the risk of a concentrated bet on any single country or sector.

Real Returns: What Inflation Takes Away

Nominal returns are what the market delivers. Real returns are what you can actually buy with the proceeds. Canadian consumer prices rose 30% from 2015 to 2025 (annual average CPI, Statistics Canada), about 2.6% a year. Subtracting that from the 10-year returns above gives a rough real return:

Real return ≈ nominal return minus inflation. The 2.6% is (2025 CPI ÷ 2015 CPI) to the power 1/10, minus 1.

Over long periods the gap compounds. As an illustration, a 6% real return turns $10,000 into about $57,400 of today’s purchasing power over 30 years, while a 0.5% real return (roughly what cash can earn after inflation in some periods) turns it into only about $11,600. Money kept in cash for decades tends to lose ground to stocks after inflation.

How Variable Are Returns Year to Year?

The long-run average almost never shows up in any given year. Here is how the S&P 500’s calendar-year total returns were spread from 1928 to 2025:

Computed from Aswath Damodaran’s annual S&P 500 total returns (US dollars, dividends included).

The market gained 20% or more in more than a third of those years, but it also lost more than 10% in about one year in eight. Knowing this spread helps investors stay calm during downturns and avoid overconfidence during strong runs. For a beginner’s grounding in how markets work, see how to buy stocks in Canada.

Sequence of Returns: Why the Order Matters

Two investors can earn the same returns in a different order and end up in very different positions along the way. This is called sequence of returns risk, and it matters most for investors who are withdrawing money (like retirees) rather than those still accumulating.

Both portfolios below have the same four yearly returns (a simple average of 8% a year) and end at the same value. But Portfolio B, which falls first, spends most of the period below where Portfolio A is, which would hurt 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 regularly, early dips can work in their favour: they buy more units at lower prices. The risk flips when you start drawing down.

What Return Should You Plan With?

Historical averages look backward. Using the past century’s returns in a retirement projection assumes the future will look the same. FP Canada and the Institute of Financial Planning publish Projection Assumption Guidelines for long-term (10 years or more) financial projections. The 2026 figures, before fees:

The guidelines say fees must be subtracted to get the net return. They sit well below recent returns, partly because future returns may not match the past.

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% to 2% a year sounds small but compounds into large differences over decades, because fees are charged on your entire balance, not just your gains. An illustration, assuming an 8% gross return:

30-year growth = $100,000 × (1 + net return)^30, rounded to the nearest $1,000.

A 2% MER costs about $377,000 over 30 years on a $100,000 starting portfolio compared with a 0.2% index ETF, nearly four times the original investment. This is a large part of why low-cost index ETFs are popular with long-term Canadian investors. See best all-in-one ETFs in Canada for options such as XEQT (MER 0.19%).

The Cost of Missing the Best Days

Investors who sell during downturns and wait to re-enter often miss the strongest days of the recovery, because, for the S&P 500 from 1996 to 2025, 76% of the best days came during a bear market or in the first two months of a bull market. A large share of the market’s long-run gain comes from a small number of very strong days, so being out of the market on those days can lower returns substantially, and nobody can reliably predict them in advance.

Key Takeaways for Canadian Investors

• Returns vary a lot year to year. The S&P/TSX Composite averaged 12.7% a year over the 10 years to 2025, but single years in that decade ranged from -8.9% to 31.7%.
• The TSX is sector-concentrated. Financials, materials and energy are its three largest sectors. Global diversification reduces this risk.
• Planning guidelines are lower than history. FP Canada’s 2026 guideline for Canadian stocks is 6.3% a year before fees.
• Fees compound against you. A 0.2% MER ETF and a 2.0% MER mutual fund holding the same index have very different outcomes over 30 years.
• Currency matters for US holdings. S&P 500 returns in CAD differ from USD returns. In years when the Canadian dollar strengthens, your USD gains shrink.
• Staying invested matters. Missing the market’s best days can cut returns sharply.

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
• How to Buy Stocks in Canada