Share Rate of Return Calculator: Compare Your True Investment Performance

Historical Equity Market Performance Benchmarks

Ever wondered if your stock investments are actually performing well? The answer isn't as simple as "up is good, down is bad." You need context – something to compare against.

That's where historical market performance comes in. Think of it as the measuring stick that helps you understand if your returns are exceptional, average, or concerning.

Long-term averages give you baseline expectations, but here's the reality: actual returns bounce around significantly from year to year. What looks like disappointment might actually be perfectly normal market behavior.

S&P 500 Index (United States)

The S&P 500 represents about 500 of America's largest companies. It's the benchmark most investors use to answer the question: "How's the market doing?"

Since its modern inception in 1957, this index has delivered an average annual total return (price growth plus dividends) of around 10%. Specific analyses put the figure at 10.13%.

Looking even further back to 1928, the story stays remarkably consistent – a 10.06% average annualized total return through late 2024.

Academic research breaks this down further: an arithmetic average annual return of 11.50% and a geometric average of 9.99%. That second number, which accounts for the effects of compounding, better represents what investors actually experience over time.

But here's what those averages don't tell you: the wild ride along the way.

Take recent performance from funds tracking the S&P 500, like Vanguard's ETF (VOO): a stellar +31.47% in 2019, followed by +18.40% in 2020, then +28.60% in 2021, before plunging to -18.15% in 2022, and rebounding with +26.33% in 2023.

The index itself tells a similar story: +26.89% price return in 2021 followed by a -19.44% decline in 2022.

This pattern highlights something crucial: hitting the long-term average in any single year is actually quite rare. Returns frequently swing dramatically above or below the mean.

What does this mean for you? Patience matters. Longer holding periods tend to smooth out those short-term jolts, making the long-term average a more relevant benchmark if you're investing for the future rather than next Tuesday.

S&P/TSX Composite Index (Canada)

If you're investing in Canadian companies, you'll want to keep an eye on the S&P/TSX Composite Index. It captures most of the market value on the Toronto Stock Exchange.

Over the 25-year period ending August 31, 2023, this index delivered an annualized total return exceeding 8% per year. That translated to a cumulative return of more than 595% – turning a $10,000 investment into nearly $70,000.

Other analyses focusing on the period since 1996 cite an average yearly total return of 9.3%.

But timing matters. During years when the Bank of Canada was hiking interest rates, that average dropped to 6.2% – a valuable insight for today's investors navigating a similar environment.

Like its American cousin, the Canadian market experiences significant yearly ups and downs. The index's price return swung from +21.74% in 2021 to -8.66% in 2022. More recent figures show a 10-year return of 7.7% and a 5-year return of 10.0% as of March 2024.

Here's a surprising fact: since 1957, only a small fraction of years saw the Canadian stock market generate performance within 2 percentage points of its long-term average.

This reinforces an important lesson: while averages provide useful long-term benchmarks, annual results often tell a dramatically different story.

Time smooths the journey. Analysis over 10-year holding periods shows a much higher likelihood of positive returns compared to shorter 3- or 5-year windows, suggesting that patience continues to be one of an investor's most valuable assets.

Historical Bond Market Performance Benchmarks

Not all investments involve buying pieces of companies. For many investors, bonds represent the steady, less flashy counterpart to stocks in their portfolio.

But what returns should you expect from these fixed-income investments? And how do they compare to stocks? Historical performance provides context that helps explain the role bonds play in investment strategies.

U.S. Aggregate Bond Market

When investors talk about "the bond market," they're often referring to the Bloomberg U.S. Aggregate Bond Index (affectionately nicknamed "the Agg"). Launched in 1986 with data backdated to 1976, it includes government securities, investment-grade corporate bonds, and mortgage-backed securities.

Historically, the index has provided positive returns, with a mean annual total return calculated at 6.7% from 1976 through recent years.

But there's been a notable downshift over time. The mean annual return over the last 25 years (approximately 1999-2024) dropped to 4.1%. Looking at just the last decade (2014-2024), it fell further to 1.6%. And the 5-year return (2019-2024)? A flat 0.0%.

What happened? Interest rates tell the story.

Annual returns for the Agg have swung significantly, from a high of +32.6% in 1982 (when interest rates were falling from historic peaks) to a low of -13.0% in 2022 (when rates rose rapidly).

That 2022 figure deserves special attention. It represented a rare negative year and highlighted a key risk in bond investing: when interest rates rise sharply, even "safe" bonds can deliver painful short-term losses.

Recent performance data from funds tracking this index shows consistently underwhelming results, with low or negative returns over 3- and 5-year periods ending in early 2025.

Canadian Universe Bond Market

For Canadian investors, the FTSE Canada Universe Bond Index serves as the comprehensive fixed-income benchmark. It includes federal, provincial, and corporate bonds denominated in Canadian dollars and has a history spanning over 40 years.

Like U.S. bonds, Canadian fixed-income securities have faced challenges in the rising rate environment. The index experienced a remarkable drawdown in 2022, reported at -12.66% year-to-date as of October 31, 2022.

This wasn't just a bad year – it potentially marked the worst performance year on record and the first instance of consecutive negative annual returns in over four decades.

Recent annualized returns reported as of mid-2023 and early 2024 tell the tale: the 5-year return was 0.57% as of July 2023, and -0.7% as of March 2024.

But there are signs of recovery. One-year returns showed improvement, with ETFs tracking the index posting returns around 7.6-7.7% for the year ending early 2025.

U.S. 10-Year Treasury Bonds

When investors talk about "risk-free returns" in U.S. dollars, they're usually referring to Treasury securities, particularly the 10-year note.

Long-term historical data (1928-2024) shows an arithmetic average annual return for 10-year U.S. Treasury Bonds of 4.85% and a geometric average annual return of 4.57%.

This is where an important distinction comes into play: yield versus total return.

Yield represents the annualized income you would receive if holding the bond to maturity, based on its current market price and coupon rate. Total return, however, includes both this income and any changes in the bond's market price, which can swing dramatically as interest rates move.

Historical 10-year Treasury yields have seen remarkable variation, from over 15% in the early 1980s to below 1% in recent memory. Long-term average yields typically land between 4.25% and 5.84%, depending on the period measured.

But here's the key insight: the total return in any given year can differ substantially from the yield at the start of that year as market prices adjust to interest rate changes.

Canadian 10-Year Government Bonds

Similar to U.S. Treasuries, Government of Canada bonds serve as key benchmarks for the Canadian fixed-income market.

While specific long-term average total return data isn't as readily available for 10-year Canadian government bonds, we do know specific annual total returns for Government of Canada long bonds: +10.04% in 2020 and +8.80% in 2019.

As with U.S. bonds, understanding the difference between yield and total return remains crucial. Historical 10-year Government of Canada bond yields have shown significant volatility over time.

The long-term average yield is cited around 4.26%, but recent yields have fluctuated near the 3% mark in early 2025. These yield changes directly impact the capital gains or losses experienced by bondholders, affecting total return.

Comparative Asset Class Performance

History tells us that, over very long periods, bonds typically generate lower returns than stocks. The trade-off? Usually less heart-stopping volatility.

Consider the contrast: the long-term geometric average return for the S&P 500 (around 10%) significantly exceeds that of U.S. 10-Year Treasuries (around 4.6%) or the U.S. Aggregate Bond Index (around 6.7% since 1976, but considerably lower recently).

This return differential reflects the risk premium associated with equity investments.

But here's where it gets interesting: the performance patterns of bonds and stocks often differ. They frequently move in different directions or with different magnitudes.

This divergence creates potential diversification benefits when both asset classes are included in a portfolio. However, 2022 demonstrated that bonds aren't immune to significant negative returns, especially during periods of rapidly rising interest rates.

This sensitivity to interest rate changes is a key characteristic of fixed-income investments, particularly those with longer durations (maturities).

Long-Term Historical Average Annual Total Returns - Major Asset Classes

Note: Bond index returns can vary significantly depending on the exact period measured, especially in recent years. The Canadian Universe Bond 5-year return is shown as an example of recent performance; longer-term averages were less available in source material. The Canadian Government Bond returns are specific annual figures, not long-term averages.

Typical Investment Costs

What happens between the market's return and what actually lands in your account? Costs eat away at performance like termites in a wooden house – silently but significantly.

The structure of investment costs has changed dramatically in recent years, particularly in the United States. Understanding these costs helps you calculate your true return.

Brokerage Commissions and Fees (United States)

Remember when buying stocks meant calling a broker and paying substantial commissions? Those days are largely gone.

The most significant development in U.S. retail brokerage has been the widespread adoption of $0 online commissions for trading U.S. exchange-listed stocks and ETFs. This shift, occurring around October 2019, resulted from intense competition among major online brokerage firms.

But don't celebrate too quickly – "free" trading typically applies only to standard online trades of listed U.S. equities and ETFs. Many other transactions still come with price tags:

• Options Trading: While the base commission might be $0, you'll pay a per-contract fee, commonly ranging from $0.50 to $0.65 per contract.
• Broker-Assisted Trades: Need help from a human? That'll cost you – typically a significant service charge (e.g., $25) on top of any applicable commission.
• Over-The-Counter (OTC) Equities: Trading stocks not listed on major exchanges often carries a per-trade commission (e.g., $6.95).
• Mutual Funds: While some funds trade commission-free, others can incur substantial fees – up to $74.95 per purchase at some brokerages for transaction-fee funds. Watch out for short-term redemption fees too.
• Other Costs: Regulatory fees like the FINRA Trading Activity Fee, SEC fees, ADR fees, account maintenance charges (though many platforms have eliminated these), and margin interest can all apply.

This $0 commission environment marks a dramatic shift from historical models where full-service brokers might charge 1-2% of the transaction value or annual fees based on assets.

The business model has changed too. Brokers now rely more heavily on payment for order flow (routing your trades to specific market makers for compensation), interest from margin loans, and fees on other services or complex products.

Brokerage Commissions and Fees (Canada)

Canadian investors have also benefited from the fee compression trend, though perhaps not as dramatically as their American neighbors.

Several firms like Wealthsimple, National Bank Direct Brokerage, and Desjardins Online Brokerage introduced zero-commission trading models for stocks and ETFs by 2021-2022. More recently, Questrade announced $0 commissions for Canadian and U.S. equities and ETFs in early 2025.

However, many major Canadian bank-owned brokerages still use flat-fee commission structures. TD Direct Investing, for instance, charges $9.99 per online stock trade (reduced to $7.00 for active traders), while its simpler TD Easy Trade platform offers 50 free stock trades per year before the $9.99 fee kicks in.

User reports suggest fees around $9.95 to $10.00 per trade remain common at some bank brokerages. Schwab, serving clients trading Canadian securities, charges $6.95 for online trades.

Beyond direct commissions, Canadian investors face additional costs:

• Currency Conversion Fees: Trading U.S. securities in Canadian dollar accounts (or vice versa) typically incurs a fee embedded in the exchange rate – usually between 1.5% and 2.5%.
• Options Trading: Fees often combine a base commission plus a per-contract charge (e.g., historically $9.95 + $1/contract for some bank brokers; Questrade now as low as $0.75/contract).
• Fund Fees: Management Expense Ratios (MERs) apply to mutual funds and ETFs. Trailing commissions paid to dealers still exist, though they've been banned for order-execution-only platforms since June 2022. Deferred Sales Charges on new mutual fund purchases were also banned as of that date.
• Account Fees: Some brokerages charge for account maintenance, inactivity, or paper statements, though these practices vary widely.

Canadian investment activities are overseen by the Canadian Investment Regulatory Organization (CIRO) and the Canadian Securities Administrators (CSA), which mandate fee disclosures to protect investors.

Typical Brokerage Fee Ranges (North America)

Note: Ranges are illustrative and based on major online brokerages. Specific fees vary by firm, account type, and trading activity. $0 commission often applies only to online trades of exchange-listed equities/ETFs in the account's base currency.

Historical Dividend Yields

When calculating your total investment return, don't forget the cash that companies hand back to their shareholders. Dividends represent real money in your pocket – a distribution of company profits that can significantly boost your overall returns.

pie
    title ....Average Dividend Yields by S&P 500 Sector
    "Utilities (3.7%)" : 37
    "Energy (High)" : 25
    "Real Estate (High)" : 15
    "Consumer Staples (2.5%)" : 10
    "Financials (2.5%)" : 8
    "Basic Materials (2.5%)" : 5
    "Industrials (2.0%)" : 4
    "Health Care (1.75%)" : 3
    "Technology (1.5%)" : 2
    "Communication Services (Variable)" : 1

But how much income should you expect from dividends? Historical yields provide important context that varies dramatically depending on the market and sector.

Overall Market Dividend Yields

S&P 500 (US)

The dividend yield of the S&P 500 fluctuates over time, influenced by both corporate payout policies and market prices. As stock prices rise, yields naturally fall (unless dividends increase proportionally).

The long-term historical average yield is approximately 1.82%. However, recent years have seen yields trend lower, recorded at just 1.27% at the end of 2024, down from 1.47% a year prior.

During market stress, yields can spike dramatically – not necessarily because companies become more generous, but because stock prices fall. During the 2008 financial crisis, for example, the yield briefly exceeded 3.8%.

The contribution of dividends to total annual return also changes year by year. In 2024, dividends contributed 1.71% to the S&P 500's total return, compared to 2.06% in 2023.

S&P/TSX Composite (Canada)

While a single long-term average yield for the Canadian composite index is less commonly cited, related data offers perspective. The FTSE Canada Index (a broad Canadian equity benchmark) showed a dividend yield of 2.96% as of March 2025 – more than double its U.S. counterpart.

For investors specifically seeking dividend income, there's even a specialized S&P/TSX Composite Dividend Index that includes all dividend-paying stocks within the main composite.

Average Dividend Yields by Sector

Ever notice how some industries seem to pay more generous dividends than others? That's not coincidental – dividend yields vary significantly across different sectors, reflecting distinct business models, capital requirements, and payout philosophies.

S&P 500 Sectors (US)

Financial analysis reveals striking differences in typical dividend yields across industry groups:

• High-Yield Sectors: Utilities lead the pack (approximately 3.7%), followed by Energy companies (particularly in sub-sectors like Oil & Gas Services/Refining), Real Estate (especially REITs, which have high payout requirements), and Consumer Staples (around 2.5%).
• Moderate-Yield Sectors: Financials and Basic Materials both hover around 2.5% yields.
• Lower-Yield Sectors: Technology companies typically offer more modest yields (approximately 1.5%), as do Health Care (1.75%), Industrials (2.0%), and Consumer Discretionary companies (varying between 2.0% and 2.5% depending on the specific industry). Communication Services yields can range widely based on the specific companies included.

S&P/TSX Composite Sectors (Canada)

While specific sector-by-sector yield data wasn't provided, the structure of the Canadian market offers valuable context.

The Financials sector (particularly banks) dominates the index, typically representing 30-38% of its total value. The Energy sector follows, often accounting for 15-20% or more.

Both these sectors are traditionally significant dividend payers in Canada. As a result, the overall yield characteristics of the Canadian market are heavily influenced by the dividend policies of companies in these two dominant sectors.

Illustrative Historical Average Dividend Yields by GICS Sector (S&P 500 - US)

Note: Yields are approximate averages based on available source data and can fluctuate significantly over time and vary within sectors.

Understanding these sector differences matters because your portfolio's dividend yield will be heavily influenced by its sector composition.

Remember too that yield provides just a snapshot of income generation relative to price – it doesn't represent your entire return. Market yields have generally been below their long-term averages in recent years, and the actual contribution of dividends to total return fluctuates annually.

Inflation Context

That 10% stock market return might look impressive on paper. But what if prices for everything you buy rose 8% during the same period? Suddenly, your "real" gain shrinks dramatically.

Inflation – the rate at which prices for goods and services increase over time – silently erodes the purchasing power of your investment returns. Understanding historical inflation helps you assess what your nominal returns (the plain percentage gain) actually mean in terms of increased buying power.

Historical Inflation Rates (United States)

The Consumer Price Index for All Urban Consumers (CPI-U) serves as America's primary inflation gauge. Looking at long-term averages reveals interesting patterns:

Over the 50-year stretch from 1975 to 2024, the average annual inflation rate was 3.84%. This period captures the notorious high-inflation years of the 1970s and early 1980s, when annual price increases exceeded 10% multiple times.

The more recent 30-year window (1995-2024) shows a considerably tamer inflation environment, with an average annual rate of 2.79%.

But these averages mask significant variability. Historical data includes periods of deflation (negative inflation) like the early 1930s, and years of virtually no price increases, such as 2009 (-0.4%) and 2015 (0.1%).

Recent 12-month inflation readings ending in early 2025 have settled into the 2-3% range after the post-pandemic spike.

Historical Inflation Rates (Canada)

Canada's inflation story shows both similarities and differences compared to its southern neighbor.

Calculations based on available data suggest a 50-year average annual inflation rate (1974-2023) of approximately 3.85% – remarkably similar to the U.S. figure. This captures the high-inflation era of the 1970s and 1980s, including a peak of 12.47% in 1981.

Over the 30-year period from 1995 to 2024, Canada's average annual inflation rate was 2.16% – somewhat lower than the U.S. average for the same timeframe.

Another source cites a long-term average (period unspecified) of 3.14%.

Like the U.S., Canada has experienced periods of very low inflation, such as 2009 (0.3%), as well as recent spikes (6.8% average for 2022). Recent 12-month figures ending in early 2025 have returned to the 2-3% range.

Long-Term Historical Average Annual Inflation Rates (CPI)

Note: Averages are calculated based on annual percentage changes in the respective Consumer Price Indices.

What This Means for Your Returns

The persistent nature of positive inflation over long periods creates a mathematical reality every investor must face: to achieve any real growth in purchasing power, your nominal investment returns must consistently exceed the inflation rate.

If your portfolio grows at exactly the same rate as inflation, you've merely preserved purchasing power – not increased it. And if your returns fall below the inflation rate, you're actually losing ground despite seeing positive numbers on your statement.

The variability in inflation rates adds another wrinkle: the "real return" (inflation-adjusted return) achieved from a given nominal return can change significantly from year to year, even if your investment performance remains constant.

This is why many financial experts suggest focusing on real returns rather than nominal figures when evaluating long-term investment performance. After all, the ultimate goal isn't just to have more dollars, but more purchasing power.

Taxation Impact Overview

Calculating your true investment return? Don't forget about your silent partner – the tax authority.

Taxes directly reduce what you keep from your investments. Understanding how capital gains and dividends are taxed provides essential context for evaluating your after-tax performance. While specific rates vary by jurisdiction, income level, and holding period (and change periodically), the basic mechanisms remain relatively consistent.

Impact of Capital Gains Tax

Ever sell a stock for more than you paid? Congratulations – you've realized a capital gain.

A capital gain occurs when you sell a capital asset, such as shares, for more than its adjusted cost base (ACB). The ACB typically includes your original purchase price plus any costs associated with acquiring it, like commissions.

Here's the key point: capital gains taxes generally apply only when the gain is realized – that is, when you actually sell the asset. Unrealized gains (increases in value of investments you still hold) typically aren't taxed annually in most scenarios.

The amount of tax you'll pay often depends on how long you've owned the asset:

• Short-Term Capital Gains: In the U.S., gains on assets held for one year or less are considered short-term and taxed at your ordinary income tax rates, which are typically higher than long-term rates.
• Long-Term Capital Gains: In the U.S., assets held for more than one year qualify for preferential lower rates (0%, 15%, or 20% depending on your income). This tax structure deliberately encourages longer holding periods.
• Canadian Inclusion Rate: In Canada, only a portion of your capital gain gets added to your taxable income. Historically, this "inclusion rate" has been 50%, meaning only half your capital gain is subject to tax at your marginal rate.

What about losses? When you sell at a loss, those capital losses can generally offset capital gains you've realized in the same year, reducing your taxable amount.

If your losses exceed your gains, a limited amount of the net loss might be deductible against other income, with remaining losses carried forward to offset future gains. Special rules, like the U.S. "wash sale" rule (which disallows a loss if you repurchase the same or substantially identical security within 30 days), add complexity.

The bottom line? Capital gains taxes reduce your net proceeds from profitable investment sales, resulting in an after-tax return lower than what you see before taxes.

Impact of Dividend Tax

Those quarterly dividend payments from your stocks? They're generally considered taxable income in the year you receive them, even if you automatically reinvest them.

The tax treatment often depends on the type of dividend:

Ordinary / Non-Qualified / Foreign Dividends: Dividends that don't meet specific criteria related to source and holding period typically get taxed at your ordinary income tax rates, similar to wages or interest. Most dividends from foreign corporations fall into this category for U.S. and Canadian taxpayers. Interest income from bonds or GICs also generally faces these higher rates.

Qualified Dividends (U.S.): Dividends from eligible U.S. or qualifying foreign corporations, where you've met specific holding period requirements, enjoy the lower long-term capital gains rates (0%, 15%, or 20%).

Eligible / Non-Eligible Dividends (Canada): Dividends from taxable Canadian corporations receive preferential treatment through a "gross-up" and dividend tax credit mechanism. This system aims to integrate corporate and personal taxes, recognizing that the corporation already paid tax on the profits being distributed.

Eligible dividends (generally from larger corporations paying the general corporate tax rate) typically receive more favorable tax treatment than non-eligible dividends (often from Canadian-Controlled Private Corporations benefiting from the small business deduction).

This makes Canadian dividends generally more tax-efficient than interest income or foreign dividends for Canadian residents with taxable accounts.

Remember that investments held within registered or tax-advantaged accounts (like RRSPs, TFSAs, FHSAs in Canada, or IRAs, 401(k)s in the U.S.) follow different tax rules, often allowing for tax-deferred or tax-free growth and distributions.

Like capital gains tax, taxes on dividends reduce your net investment income, lowering your overall after-tax return.

General Implications of Taxation

The impact of taxes creates a meaningful gap between pre-tax returns (what your investments earn) and after-tax returns (what you actually keep) in taxable accounts. This reduction in return is sometimes called "tax drag."

The extent of this drag depends on numerous factors: the type of return (capital gain vs. dividend), holding period, specific tax rules (qualified/eligible status, inclusion rates), and your personal marginal tax rate.

Tax systems often nudge investor behavior in specific directions. The U.S. system rewards patience through lower rates on long-term gains. The Canadian dividend tax credit makes dividend income from Canadian corporations relatively more attractive compared to interest income.

These complex rules create opportunities for tax-efficient investing strategies:

• Using tax-advantaged accounts strategically
• Tax-loss harvesting (selling investments with losses to offset gains)
• Considering the type of income generated (capital gains vs. dividends vs. interest)

Each of these approaches can help manage the overall tax impact on your investment returns and improve your after-tax results.

Conclusion

That impressive 12% return on your investment? It's just the headline, not the full story.

Between the market's performance and your pocket lies a gauntlet of reality checks. Benchmark indices like the S&P 500 (10% historical average) provide crucial context—but remember, the "average" year rarely exists. Most years swing dramatically above or below the mean.

The silent partners in your investment journey each take their cut: transaction costs, inflation (eroding about 3.8% annually over the past half-century), and taxes on realized gains and dividends.

A more honest picture emerges when you place your return alongside relevant benchmarks, subtract costs, adjust for inflation, and account for taxes. That 12% might shrink to 7% real, after-tax return—still valuable, but a different story entirely.

What matters isn't just the growth of your money, but the growth of your purchasing power. This fuller context transforms raw calculations into meaningful insights about what actually lands in your pocket, ready to fund your future.