100 Years of Investment Growth - S&P 500 Lessons

As a financial advisor, I am often asked: "Is the market a gamble?" When you look at the headlines of a single week, it certainly feels like one. But when we zoom out to a 100-year view (1926–2025), the "noise" of the daily news transforms into the "signal" of one of the greatest wealth-creation engines in human history. Let’s look at the cold, hard data from the last century and what it actually means for your portfolio.

1. The Power of 10.49%

Over the last 100 years, the S&P 500 has delivered a Compound Annual Growth Rate (CAGR) of 10.49%. To put that in perspective: $100 invested in 1926 would have grown to over $2.1 million by the end of 2025. This period wasn't a "golden age" of peace and quiet. It included the Great Depression, World War II, the Cold War, the 2008 Financial Crisis, and a global pandemic. Through every single one of those events, the collective ingenuity of the 500 largest companies in the U.S. continued to innovate, adapt, and grow.

2. Is the Past a Reliable Map for the Future?

Investors often hear the disclaimer: "Past performance is not indicative of future results." While legally true, history is the only map we have. The 100-year record is reliable because it represents human progress. As long as you believe that companies will continue to seek profits, invent new technologies (like the AI powering today's "Vibe Coding" revolution), and expand into new markets, the fundamental thesis for index investing remains intact. However, "reliable" does not mean "smooth."

3. The Expert’s Caution: The "Volatilty Tax"

While the 100-year average is ~10.5%, the market almost never returns exactly 10.5% in a single year. In fact, it is usually much higher or much lower.

As an advisor, I urge you to keep these three cautions in mind:

• The Drawdown Reality: In 25 out of the last 100 years, the market ended in the red. We’ve seen drops as deep as -43% (1931) and -37% (2008). If you cannot stomach a 30% drop without panic-selling, the 100-year return is irrelevant to you because you won't be around to collect it.

• Inflation is the Silent Killer: A 10% return feels great, but if inflation is 4%, your "Real Return" is only 6%. Always measure your wealth in purchasing power, not just the number of dollars in your account.

• Sequence of Returns Risk: If you are 25 years old, a market crash is an "opportunity." If you are 64 and about to retire, a market crash is a "crisis." The 100-year average protects the patient, but it does not protect the poorly timed.

The Bottom Line

The S&P 500 is not "risk-free"—nothing in finance is. But it is a proven system for capturing the growth of the modern economy.

My advice? Don't try to outsmart the 100-year trend. Instead, build a "vibe" of discipline. Automate your contributions, diversify your "shell" accounts (RRSPs, FHSAs, TFSAs), and let the century-long engine of compounding do the heavy lifting for you. Reach out  to review your current investment strategy, minimize taxes and mitigate risks/ losses. You can also read some related blogs on financial planning, managing finance and canadian financial realities.