See how your savings grow over time with compound interest and regular monthly contributions.
Rates as of Q2 2025 (example)
A compound interest calculator shows how an initial investment, combined with regular monthly contributions, can grow over time as interest earns interest on itself — a powerful effect that becomes more pronounced the longer your money has to grow.
This calculator compounds your balance monthly: each month, interest is calculated on the current balance and added to it, and then your monthly contribution is added — so future interest is calculated on a balance that includes both your original investment and all previously earned interest, not just the original amount.
Formula: Each month, Interest = Balance × (Annual Rate ÷ 12); Balance = Balance + Interest + Monthly Contribution. This repeats for the number of months entered. Total Interest = Final Balance − Total Contributions (Initial Investment + sum of all monthly contributions).
Example: Starting with CA$10,000 and contributing CA$200/month at an expected 5% annual interest rate (example rate — enter a rate appropriate to your investment type) over 20 years, total contributions reach CA$58,000, with total interest earned of roughly CA$51,333 — giving a final balance of about CA$109,333. Notice that interest earned (CA$51,333) is actually higher than the total contributions beyond the initial investment (CA$48,000), illustrating the long-term power of compounding. (Note: this example is for illustration purposes only — actual returns depend on where you invest and market performance.)
Where you hold money that earns compound interest matters a lot for the tax you'll pay on the growth. Inside a Tax-Free Savings Account (TFSA), all growth — interest, dividends, and capital gains — is completely tax-free, both while invested and on withdrawal, up to your TFSA contribution room (see our TFSA Calculator). Inside a Registered Retirement Savings Plan (RRSP), growth is tax-deferred — you don't pay tax on it while it remains in the RRSP, but withdrawals are taxed as income (see our RRSP Calculator). In a non-registered (taxable) account, interest income is generally taxed at your full marginal rate each year as it's earned, whereas dividends and capital gains may receive more favourable tax treatment, depending on your province and overall income. This means the same nominal interest rate can result in quite different after-tax growth depending on the account type — for long-term savings, using available TFSA and RRSP room before a non-registered account is often (though not always) the more tax-efficient approach. GICs (Guaranteed Investment Certificates) are a common way Canadians earn compound interest with capital protection — see our GIC Calculator for GIC-specific projections.
Simple interest is calculated only on the original principal amount, so it grows by the same dollar amount each period. Compound interest is calculated on the principal plus all previously accumulated interest, so the growth accelerates over time - each period's interest is calculated on a larger base than the last.
This depends on your income, tax bracket, available contribution room, and when you expect to need the money. TFSAs offer completely tax-free growth and withdrawals, RRSPs offer tax-deferred growth with withdrawals taxed as income (often useful if your tax rate in retirement will be lower than now), and non-registered accounts have no contribution limits but are subject to annual tax on the growth. Many Canadians use a combination - consider speaking with a financial adviser for personalised guidance.
This happens because compounding means interest earns interest. Over a long enough period, especially at a meaningful interest rate, the cumulative interest can exceed the total amount you contributed beyond your initial investment - this is the core benefit of starting to invest earlier rather than later, even with smaller amounts.
No. This calculator shows pre-tax growth based on the interest rate you enter. The actual after-tax growth depends on the account type (TFSA, RRSP, or non-registered) and, for non-registered accounts, the type of income (interest, dividends, or capital gains) and your personal tax situation.
This depends on what you're modelling. High-interest savings accounts and GICs typically offer lower, more predictable rates. A diversified investment portfolio (such as one held in a TFSA or RRSP) might assume a higher long-term average rate, but with the understanding that actual returns will vary year to year and could be negative in some years - investment values can fall as well as rise.
This calculator compounds interest monthly - each month, interest is calculated on the current balance and added to it, before your monthly contribution is added. Some accounts compound daily, monthly, or annually; monthly compounding is a common and reasonable approximation for many savings and investment products.
Disclaimer: The information, rates, and figures provided on this page are for educational and illustrative purposes only and do not constitute financial or tax advice. The interest rate used is an example only and does not represent a guaranteed or likely return for any specific account or investment - investment values can fall as well as rise. This calculator does not account for taxes, which vary depending on the account type (TFSA, RRSP, or non-registered) and your personal circumstances. Always consult a qualified financial adviser for guidance on savings and investment strategy.