15% annual returns is realistic? (2024)

Stocks, in essence, should provide a greater return than bonds. However, they come with greater volatility along the way.

For the S&P 500, the generic long-term return is around 8 to 10 percent a year. Comparatively, if you are able to pick your own stocks which justifies the effort, you ought to be getting a 12-15 percent return over time. If not, your skills or techniques may be a bit flawed. If this occurs, you should step aside and just buy some good ETFs. The stock market is not for everyone and that is okay. The ugly truth is that it may be NOT worth your time to play in the stock market.

If you are investing emotionally, chasing trends and news, loading up on penny stocks, or failing to diversify, you should also step aside to avoid bigger potential missteps.

All these pitfalls notwithstanding, if you can develop some basic skills/ techniques and manage to make 15 percent over time, stocks are, in essence, one of the better asset classes. Investing in good companies means you own partial ownership rights in the company that entitles you to share the earnings that may occur and accrue. If you started with $100,000 in your RRSP or TFSA with 15% compound returns, it will bring you $813,706.16 in 15 years.

It is not worth your time to do any investment if it cannot bring you 12 to 15 percent per year. Investing properly is not a gamble. We should not lose money in the stock market on a long term basis. In fact, a near guaranteed return of 15% or higher is a realistic expectation.

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