What is the difference between monthly and annual compounding?

With monthly compounding, interest is calculated and added to your balance 12 times a year, so each month's interest starts earning its own interest sooner. Annual compounding does this once a year. On the same nominal rate, monthly compounding gives a slightly higher effective return — but the difference is small compared to your contribution amount or the rate itself.

What is a realistic interest rate to use?

It depends on where the money sits. A high-interest savings account or GIC in Canada might earn 3-5%, while a diversified long-term investment portfolio has historically averaged around 6-7% per year before inflation — with much more volatility along the way. Use a conservative rate for planning, and remember past performance never guarantees future results.

Does this calculator account for taxes or inflation?

No. The projection is in nominal dollars before tax and inflation. In real life, growth inside a TFSA is tax-free and inside an RRSP is tax-deferred, while non-registered accounts are taxed along the way. Inflation also shrinks what future dollars can buy. Treat the result as a planning estimate, not a promise.

Which matters more: how much I contribute or the interest rate?

For most people, contributions matter more because they are the part you fully control. A higher monthly contribution reliably raises your future value, while a higher assumed rate is only a guess about the future. Time matters too — money invested for 30 years at a modest rate often beats money invested for 10 years at a great rate.

Can I use this for TFSA or RRSP projections?

Yes — the math works the same way for any account. Just remember the calculator ignores contribution limits, taxes, and fees. A TFSA has an annual contribution limit, an RRSP gives you a tax deduction now but is taxed on withdrawal, and real investments carry fees (like MERs) that reduce your effective return.

What is the difference between monthly and annual compounding?

With monthly compounding, interest is calculated and added to your balance 12 times a year, so each month's interest starts earning its own interest sooner. Annual compounding does this once a year. On the same nominal rate, monthly compounding gives a slightly higher effective return — but the difference is small compared to your contribution amount or the rate itself.

What is a realistic interest rate to use?

It depends on where the money sits. A high-interest savings account or GIC in Canada might earn 3-5%, while a diversified long-term investment portfolio has historically averaged around 6-7% per year before inflation — with much more volatility along the way. Use a conservative rate for planning, and remember past performance never guarantees future results.

Does this calculator account for taxes or inflation?

No. The projection is in nominal dollars before tax and inflation. In real life, growth inside a TFSA is tax-free and inside an RRSP is tax-deferred, while non-registered accounts are taxed along the way. Inflation also shrinks what future dollars can buy. Treat the result as a planning estimate, not a promise.

Which matters more: how much I contribute or the interest rate?

For most people, contributions matter more because they are the part you fully control. A higher monthly contribution reliably raises your future value, while a higher assumed rate is only a guess about the future. Time matters too — money invested for 30 years at a modest rate often beats money invested for 10 years at a great rate.

Can I use this for TFSA or RRSP projections?

Yes — the math works the same way for any account. Just remember the calculator ignores contribution limits, taxes, and fees. A TFSA has an annual contribution limit, an RRSP gives you a tax deduction now but is taxed on withdrawal, and real investments carry fees (like MERs) that reduce your effective return.

Canada · Savings & Investing

Compound Interest Calculator Canada

See your money grow. Project your savings with monthly contributions, compounded monthly, quarterly or annually — handy for TFSA and RRSP growth thinking.

Your Savings Plan

💵 Money In

Initial Investment ⓘ

Monthly Contribution ⓘ

📅 Time & Growth

Years Invested

Annual Interest Rate ⓘ

Compounding Frequency ⓘ

Interest is added 12 times a year.

Tip: results update live as you move the sliders.

How Compound Interest Works

Compound interest is interest earned on your original money plus the interest it has already earned. In year one, you earn interest on your deposit. In year two, you earn interest on your deposit and on last year's interest. Each year the base gets a little bigger, so the growth quietly speeds up — like a snowball rolling downhill. This is the engine behind long-term saving, whether your money sits in a TFSA, an RRSP, or a plain savings account.

Why starting early matters more than you think

Time is the most powerful ingredient in compounding because every extra year gives all of your past growth another year to grow on. Someone who invests $300 a month from age 25 to 35 and then stops can end up with more at 65 than someone who invests $300 a month from 35 to 65 — ten years of early money beats thirty years of later money. Try the What If — Start Earlier tab above: starting the exact same plan five years earlier is often worth tens of thousands of dollars, mostly from interest-on-interest you never had to lift a finger for.

Does compounding frequency make a big difference?

A little, but not as much as people expect. On the same nominal rate, monthly compounding beats annual compounding because each month's interest starts earning its own interest sooner. The gap is real — a few hundred dollars on a $50,000 balance over a decade — but it is dwarfed by the effect of your contribution amount, your rate, and your time horizon. Switch the frequency buttons above and watch: the numbers move, but the big levers stay big.

Monthly contributions vs. a higher rate: which matters more?

For most savers, contributions matter more — because they are the part you fully control. Raising your monthly contribution by $100 reliably raises your future value every single time. Chasing a rate that is 1% higher is only a guess about the future, and higher expected returns always come with more risk. The surest way to grow the number on screen is boring but true: contribute steadily, keep fees low, and give it time.

An honest note about these projections

Three things this calculator does not include. First, returns are not guaranteed — real investments go up and down, and a smooth 7% line on a chart never happens in real life. Second, inflation is ignored: $100,000 in twenty years will buy less than $100,000 today. Third, taxes are ignored: growth in a TFSA is tax-free and in an RRSP is tax-deferred, but non-registered accounts are taxed along the way, and fees quietly reduce your effective return. Use these numbers as a planning estimate and a motivator — not a promise.

Play with the sliders above, then open the Start Earlier tab and see what five extra years are really worth. Your future self will thank you.