The Big Picture chart illustrates the growth of $1,000, invested in several major asset classes, from 1935 onward (or from any selected year subsequent to 1935). Asset classes include Canadian T-Bills, Canadian government bonds, international stocks, Canadian stocks, U.S. stocks, as well as three hypothetical portfolios, plus inflation. Summary statistics are presented for each asset class and portfolio, including compound annual returns and volatilities. The Big Picture chart conveys various investment principles, including volatility vs. return, diversification, and the importance of long-term investing.

^the Big Picture

Best/Worst Years

1-yr and 5-yr rolling period returns.

All returns are compound annual returns.

Best

Worst

Best

1-yr

5-yr

Asset Class

Worst

1-yr

5-yr

Select Asset Classes & Model Portfolios

Equities

Fixed Income

Model Portfolios

Up to six asset classes and model portfolios can be selected at a time.

Select start date (month and year)

Historical monthly return data, from 1935, supplied by CRSP and GFD, Inc.

The 'Time and Risk' chart illustrates the best, worst, and median compound annual returns over one-year, three-year, and ten-year rolling periods for each of the following asset classes: U.S. Stocks, Canadian Stocks, Moderate Portfolio, Canadian Bonds, and Canadian T-Bills from 1935 onward. The chart shows that the longer the holding period, the lower the historical likelihood of loss. For example, the chart shows that a $100 investment in the Moderate Portfolio made at the beginning of the worst 1-year period would have delivered an annual return of negative 23 percent. The same investment made at the beginning of the worst 10-year period would have delivered a slightly positive return.An investor holding the Moderate Portfolio for just one year has made money 84 percent of the time since 1935. Buying and holding the Moderate Portfolio for any 10-year period has produced a positive return 100 percent of the time.

The 'Canadian Stocks After Market Downturns' chart illustrates the strong recovery and positive performance of Canadian stocks at various intervals (from one month to five years) following historical crises; namely: the early 1980s recession, the “dot-com bubble”, and the 2008 financial crisis.

This table summarizes the compound annual returns, by historical decade (starting with the 1940s), for each of the following major asset classes: U.S. Stocks, Canadian Stocks, International Stocks, Canadian Bonds, and Canadian T-Bills. It also includes compound annual returns by decade for inflation and three hypothetical portfolios. The table also includes trailing 1-year returns, all-time returns (since 1935), and historical volatilities (as measured by standard deviation) for each of the above asset classes and portfolios.

The “Gold, Oil, Housing, and Key Rates” charts plots historical prime rates, inflation rates, CAD-USD exchange rates, as well as historical prices for gold, oil, and Canadian housing, from 1935 onward. The chart reinforces the fluctuating nature of these variables.

The 'GIC returns' chart illustrates the historical performance of GICs relative to Canadian Stocks, Canadian Bonds, and Inflation. From 1952 through 2020, GICs returned 5.8% (compound annual return), vs. 9.2%, 6.8%, and 3.3% for Canadian Stocks, Canadian Bonds, and Inflation, respectively.

Recessions are marked in grey. International Stocks exclude U.S. Stocks. The Aggressive Portfolio is composed as follows: 15% Bonds, 25% Canadian Stocks, 25% U.S. Stocks, 10% U.S. Small Cap Stocks, 20% International Stocks, 5% T-Bills. The Moderate Portfolio is composed as follows: 30% Bonds, 20% Canadian Stocks, 20% U.S. Stocks, 20% International Stocks, 10% T-Bills. The Conservative Portfolio is composed as follows: 60% Bonds, 10% Canadian Stocks, 10% U.S. Stocks, 20% T-Bills.

This chart shows the inferred growth of one thousand dollars invested on the selected start date. This chart is for illustrative purposes only; it does not constitute investment advice and must not be relied on as such. Assumes reinvestment of all income and no transaction costs or taxes. The portfolios shown are neither real, nor recommended. They were rebalanced each January. Risk is measured by the standard deviation (volatility) of annual returns. All returns are compound annual returns unless otherwise indicated. All values are expressed in Canadian dollar terms, except oil and gold prices, which are in U.S. dollars.

Sources: U.S. Stocks: S&P 500 Total Return index; U.S. Small Cap Stocks: NYSE/NYSEMkt,NASDAQ Small Cap Index—Center for Research in Security Prices (CRSP). International Stocks: ex-U.S.A. Total Return Index; Bonds: Canada 10-year Total Return Government Bond Index; Canadian Stocks: S&P/TSX Composite Total Return Index; T-Bills: 3-Month Treasury Bill Total Return Index; Inflation: Consumer Price Index; Gold prices; exchange rates—Global Financial Data, Inc. Recessions—Statistics Canada. Prime Interest Rate—Bank of Canada. House Prices: 1985-present—Statistics Canada; all other years—U.S. Case/Shiller index used as proxy for trends in Canadian market. Oil prices—InflationData.com.

The reproduction of part or all of this publication without prior written consent from Investments Illustrated, Inc. is prohibited. The Big Picture, and the Investments Illustrated name and logo, are registered trademarks. Past performance is not an indicator of future performance. © Investments Illustrated, Inc. All Rights Reserved.