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Financial Planning -> Stocks, Bonds etc.   -> Investment Returns

Historical Investment Returns on Stocks, Bonds, T-Bills

The Canadian Consumer Price Index has been quite stable since 1992, but increased significantly in 2021.  In the 30 years from 1963 to 1992, the average annual increase (inflation rate) was 5.7%.  During that time, there were 5 years where the inflation rate was over 10%, including 1981, when the rate was 12.4%.  1981 is also the year when Canadian 5 year mortgage rates were over 21% for a couple of months.  The average 5 year mortgage rate from 1963 to 1992 was 11.03%.

Historical before-tax returns on $1,000 invested in stock markets and other investments
to December 31, 2021
Type of Investment 1 year 5 years 10 years 20 years Since
Dec 31, 1979
42 years
50 years Since
Dec 31, 1949
72 years
Avg
Annual
Return
Value Avg
Annual
Return
Value Avg
Annual
Return
Value Avg
Annual
Return
Value Avg
Annual
Return
Value Avg
Annual
Return
Value Avg
Annual
Return
Value
Cdn 3 month T-bills 0.1% $1,001 0.9% $1,044 0.8% $1,085 1.5% 1,358 5.0% 7,864 5.4% 14,107 4.8% 29,375
Cdn Govt Bonds 1 to 3 year 0.5% 1,005 1.1% 1,058 1.0% 1,105 1.9% 1,454 5.4% 9,046 5.8% 16,569 5.3% 40,713
Cdn Govt Bonds over 10 years 1.8% 1,018 1.8% 1,094 2.1% 1,226 3.2% 1,882 6.4% 13,650 6.8% 26,719 6.2% 76,731
S&P/TSX (Cdn) Composite TRI (formerly TSE300 Total Return) (3) 25.1% 1,251 10.0% 1,613 9.2% 2,400 8.1% 4,739 9.1% 38,466 9.6% 99,602 n/a n/a
Nikkei 225 TRI © Nikkei Inc. in Cdn$ (2) -4.9% 951 9.7% 1,587 13.1% 3,424 6.2% 3,357 6.9% 16,657 n/a n/a n/a n/a
S&P 500 (US) TRI in Cdn$ 28.2% 1,282 17.3% 2,218 19.1% 5,766 8.4% 5,049 12.6% 143,533 11.7% 248,060 12.0% 3,571,783
European stocks Gross TRI in Cdn$ 16.5% 1,165 9.5% 1,576 11.2% 2,902 5.8% 3,073 10.4% 63,331 10.5% 144,037 n/a n/a
Emerging markets stocks Gross TRI in Cdn$ (1) -2.6% 974 9.0% 1,539 8.2% 2,204 8.9% 5,459 n/a n/a n/a n/a n/a n/a
Canadian Consumer Price Index All Items (4) 4.8% 1,048 2.3% 1,121 1.8% 1,198 2.0% 1,472 3.1% 3,600 3.9% 6,882 3.5% 11,818

Value is the value at the end of the period, of $1,000 Cdn invested at the beginning of the period.
n/a = not available
TRI = Total Return Index

The column for returns since December 31, 1979 reflects the earliest data we have for the Nikkei 225 Index.

* Note that the average annual return on bonds is the average yield if the bonds are held to maturity.

(1)  For Emerging Markets, the earliest data that we have is December 31, 1987.  The average annual return in Canadian dollars for emerging markets for the 34 years from 1987 to 2021 is 10.4%.  $1,000 invested at the end of 1987 would have a value of $28,528 Canadian at the end of 2021.

(2)  The Nikkei 225 Total Return Index (TRI) year end factors in yen are used with the permission of Nikkei Inc. to calculate the above results.  Recent Nikkei year end factors are available on the Nikkei website.  The earliest data that we have is December 1979, when the Nikkei 225 TRI was started.  The average annual return in yen for the Nikkei 225 TRI for the 42 years from 1979 to 2021 is 4.9%.  1,000 yen invested at the end of 1979 would have a value of 7,364 yen at the end of 2021.

(3)  Some of the earlier S&P/TSX Composite Index Total Return data is from Libra Investment Management Inc., sourced from the Canadian Institute of Actuaries.  Data for recent years is from the Financial Times website.  Historical data is available from Investing.com.

(4)  The Annual CPI increase is not the average increase per year, but is the increase from December to December.

Exchange Rate re Above Returns

The change in the Canadian dollar can have a significant effect on some of the above results.  See the following 1 year results in US$:

S&P 500 28.7% $1,287
European stocks 17.0% 1,170
Emerging markets stocks    -2.2% 978

The 2021 1 year return for the Nikkei 225 TRI © Nikkei Inc. in yen is 6.7%.

Your Investment Returns

If you have brokerage statements which show your return for the past year for US$ accounts, please note that this will be the return on the US$ amounts, not the return when your investments are converted to Canadian dollars.  You can use our Investment Return Calculator to calculate your return in Cdn$, by converting the beginning balance, deposits and withdrawals, and ending balance to Cdn$ using the exchange rate in effect on each of those dates.

Other sources of data used to calculate the above returns:

Bank of Canada Rates and Statistics - Interest Rates for T-bills and bonds

Standard & Poor's

Statistics Canada Consumer Price Index

Investing.com

Financial Times

Yahoo Finance

Morgan Stanley

UBC Pacific Exchange Rate Service.

The returns are the total returns with dividends or interest reinvested.

All values and returns are in Canadian $.

Taxation of Interest vs Dividends vs Capital Gains

The above table shows before-tax returns.  The big difference between the returns on the S&P 500 and bonds or T-bills becomes even bigger after tax.  The bond or T-bill interest is 100% taxable every year.  Most of the return on the S&P 500 stocks would be capital gains, which is only 50% taxable, and is not taxable until the investment is sold.  The dividends from the S&P/TSX index stocks are normally eligible for the enhanced dividend tax credit for Canadian stocks, which results in a very low tax rate.  See our article on tax treatment of income from different types of investments.

See our Investment Income Tax Calculator which shows the big difference in taxes payable on different types of investment income

Recommended Stocks

See our article on recommended stocks for registered or non-registered accounts - these suggested portfolios are good for novice investors, or investors who don't have the time or the interest to do their own research.

Risk

Investing is not without risk, and the market has many ups and downs.  See our article on Risk as it Relates to Investing for more information.

Tax Tips:

     Calculate your own investment returns using our Investment Return Calculator.

     Use our Investment Income Tax Calculators to compare taxes on different types of investment income.

     See our Tax Rate Tables to compare marginal tax rates on different types of investment income.

Revised: January 29, 2022

 

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