Compound Interest Calculator

1. How to Use the Compound Interest Calculator

Starting amount. Enter what you already have set aside for this goal: a TFSA balance, a GIC, or cash in a savings account. Enter 0 if you are starting from scratch. The calculator treats the starting amount as invested on day one, so it earns a full month of interest in month one.

Monthly contribution. This amount is added at the end of every month, beginning with month one. $500 a month is $6,000 a year. If you save once a year instead, for example a lump sum into your TFSA each January, divide the yearly amount by 12. The result will be a little lower than a January 1 deposit would give, because each monthly slice has less time to grow.

Annual rate. For a savings account or GIC, use the posted annual rate. For investments, use an assumed average return, and please try more than one, because no investment return is guaranteed. The field accepts negative rates so you can test a bad stretch.

Years and compounding. Enter whole years. Then choose how often interest is added to the balance. For a deposit product, match the frequency in its terms. Stocks, bonds and funds have no stated compounding; their gains arrive unevenly, so monthly is a sensible way to model them.

Reading the result. You get the value at the end of the period, the total you contributed, the interest and growth (value minus contributions) and the growth share of the total. The bar chart and the table show the balance at the end of each year, which is useful for checking a milestone such as a down payment date. Change one input at a time to see which one moves the answer most. It is usually time.

2. The Compound Interest Formula, Explained

Simple versus compound. Simple interest is paid only on the original amount. $10,000 at 5% simple interest earns $500 a year, or $5,000 over 10 years, for a total of $15,000. Compound interest adds each payment to the balance, so the next payment is larger. With yearly compounding the same $10,000 reaches $16,288.95, which is $1,288.95 more than simple interest.

The lump-sum formula. A = P x (1 + r/n)^(n x t), where P is the starting amount, r the annual rate as a decimal, n the number of compounding periods a year and t the number of years. For $10,000 at 5% compounded monthly for 10 years: 1 + 0.05/12 = 1.0041667, raised to the power of 120 gives 1.6470095, and $10,000 x 1.6470095 = $16,470.09.

The formula for monthly savings. FV = PMT x [((1 + i)^N – 1) / i], where PMT is the monthly deposit, i the monthly rate and N the number of months. For $500 a month at 5% compounded monthly for 20 years, the bracket works out to 411.0337, so the deposits grow to $205,517 ($500 x 411.0337). Add the $10,000 starting amount, which grows to $27,126 over the same 20 years, and the total is $232,643 ($27,126 + $205,517), the calculator’s default result.

The effective monthly rate. The calculator works month by month. It converts your annual rate with the formula (1 + r/n)^(n/12) – 1. At 5%, that gives 0.407412% a month for yearly compounding, 0.416667% for monthly and 0.417507% for daily. Using one monthly engine for every choice keeps monthly contributions consistent while still honouring the compounding frequency you picked.

The effective annual rate. The formula (1 + r/n)^n – 1 shows what a quoted rate really earns over a year. A 5% rate compounded monthly is an effective 5.1162% a year. Use the effective rate to compare products that quote different frequencies.

Contributions at month end. Deposits are added at the end of each month, which is called an ordinary annuity. If you deposit at the start of each month instead, every deposit earns one extra month of interest, so your real result would be slightly higher than the calculator shows.

1. The calculator converts your annual rate to an effective monthly rate for the compounding you chose.
2. It grows the starting amount by one month of interest.
3. It adds your monthly contribution at the end of that month.
4. It repeats the two steps above for every month, 240 times for a 20-year plan.
5. It records the balance and the running total of contributions at the end of each year.
6. It reports the final value, total contributed, and growth as value minus contributions.

3. Compounding Frequency: $10,000 at 5% for 10 Years

The table below holds the rate, the amount and the time fixed and changes only how often interest is added. Every figure was computed with the calculator’s own method and checked against the lump-sum formula; both give the same result to the cent.

What the table shows. More frequent compounding pays interest on interest sooner, so the balance is higher. Moving from yearly to monthly compounding adds $181.14 over 10 years ($16,470.09 – $16,288.95). Moving from monthly to daily adds only $16.56 ($16,486.65 – $16,470.09). The extra gain shrinks quickly as the periods get shorter.

The rate matters more than the frequency. A rate just 0.25 percentage points higher, 5.25% compounded only once a year, grows $10,000 to $16,680.96 in 10 years. That beats 5% compounded daily by $194.31 ($16,680.96 – $16,486.65). When you compare two savings products, look at the rate first and the compounding second.

How to read a product’s terms. A deposit agreement usually states two things: how often interest is calculated and how often it is paid or added to your balance. Interest compounds only once it is added to the balance. A GIC that pays interest out to your chequing account each year does not compound at all, because the interest leaves the GIC. A compound GIC keeps the interest inside and grows on it.

Daily compounding in the calculator. The daily option uses 365 compounding periods in every year. At 5%, that works out to 0.417507% a month, only slightly above the 0.416667% of monthly compounding, which is why the monthly and daily rows in the table are so close.

Comparing quotes. When two posted rates are close, frequency can decide it. 4.40% compounded monthly is an effective 4.4898% a year, which beats 4.45% compounded yearly. Convert both quotes to effective annual rates with the formula in section 2 before you decide. Our GIC vs high-interest savings account comparison covers the other trade-offs, such as access to your money.

4. Worked Examples: Three Hypothetical Savers

Each example below uses the calculator’s method: an effective monthly rate and deposits at the end of each month. The people are invented to show the arithmetic.

What the three examples teach. Amira shows that steady deposits do most of the early work and growth takes over later. Ben and Chloe show that time is the input you cannot buy back. Dev shows that for a short goal at a low rate, almost all of the target comes from your own deposits, so the saving rate matters far more than the interest rate. Our FHSA calculator handles Dev’s case with room and deductions included.

5. Reference Tables: Growth at 2% Up to 8%

These static tables use monthly compounding and the calculator’s method, so you can check a result without running the tool. Find your rate in the left column and read across to the number of years.

Reading the lump-sum table. At 2% a year, $10,000 needs 30 years to reach $18,212.09. At 8% it passes $22,000 in 10 years and tops $109,000 in 30. The gap between rows widens every decade because each year’s growth is calculated on a bigger base.

Reading the monthly table. At 6% for 30 years, $180,000 of deposits becomes $502,257.52. Growth is $322,257.52, or 64.2% of the final balance. Over 10 years at the same rate, growth is only $21,939.67 ($81,939.67 – $60,000). Compounding is slow at first and fast later.

Scaling the tables. The results scale in a straight line with the amount. For $20,000, double the lump-sum figures. For $250 a month, halve the monthly figures. To combine both, add the two results together, as in section 2.

6. The Rule of 72

The shortcut. Divide 72 by the annual rate of return to estimate how many years it takes for money to double. At 6%, 72 / 6 = 12 years. The exact answer for yearly compounding is the natural log of 2 divided by the natural log of (1 + rate), which gives 11.90 years at 6%.

Where it is accurate. The estimate is closest between about 6% and 10%. At 8% it is almost exact (9.00 years against 9.01). At very low rates it runs long: at 1% it says 72 years when the true figure is 69.66. At 12% and above it runs a little short.

Using it for fees and inflation. The rule works for anything that compounds. If prices rise 3% a year, money left in cash loses half its buying power in about 24 years (72 / 3). A fee works the same way in reverse: it lowers the rate you double at, so a fund earning 7% before a 2% fee doubles in about 14.4 years (72 / 5) instead of about 10.3 years (72 / 7).

Using it for debt. An unpaid balance growing at 20% a year doubles in about 3.6 years (72 / 20); the exact figure with yearly compounding is 3.80 years. That is why paying off high-interest debt usually comes before investing for growth.

7. How Fees Shrink Compound Growth

Use this calculator to compare two fee levels on the same savings plan. It grows each scenario monthly at the return minus its fee, so the gap compounds year after year.

Why a small fee is a big number. A fee is charged on your whole balance every year, not on your gains. A 2% fee on a 6% return takes one third of the return before compounding even starts, and the lost growth would itself have grown.

The calculator’s default case. $25,000 to start, $300 a month, 25 years and a 6% return before fees. Your deposits total $115,000 ($25,000 + $300 x 300 months). At a 0.25% fee the plan ends at $304,973.59. At a 2% fee it ends at $222,082.99. The difference is $82,890.60, or 27.2% of the low-fee result. This example is hypothetical, and the 6% return is an assumption, not a forecast.

Where fees come from. Mutual funds and exchange-traded funds charge a management expense ratio inside the fund. Robo-advisors add a management fee on top of fund costs. Self-directed accounts may charge trading commissions and account fees. Our robo-advisor fee comparison and online broker comparison list each provider’s published costs, and the investment fee calculator adds up what your broker and your funds cost you each year.

What to do with the result. Enter your real total fee, not just the headline management fee. A robo-advisor’s management fee plus its funds’ expense ratio is the true cost. Then ask what you get for the gap: advice, rebalancing, or nothing you could not do yourself. Our broker and robo-advisor rating method explains how we weigh costs against features.

8. Compound Interest in Canada: Tax, TFSAs and RRSPs

Interest outside a registered account. Interest earned in a regular (non-registered) account is added to your income and taxed at your marginal rate every year, whether you spend it or not. Tax paid each year leaves the account, so the balance compounds at the after-tax rate, not the posted rate.

Why the RRSP and TFSA tie in that example. When your tax rate is the same when you contribute and when you withdraw, an RRSP and a TFSA give the same after-tax result. An RRSP wins if your rate is lower at withdrawal, and a TFSA wins if it is higher. Our TFSA vs RRSP comparison works through the cases, and the RRSP tax refund calculator shows the deduction for your province.

2026 room that shelters growth. The 2026 TFSA limit is $7,000, and someone who has been 18 or older and resident in Canada every year since 2009 and never contributed has $109,000 of room. RRSP room is 18% of last year’s earned income, up to $33,810 for 2026, less any pension adjustment. The First Home Savings Account gives $8,000 a year up to $40,000 for life. See the TFSA contribution limit by year and the RRSP contribution limit for the details, or check your own room with the TFSA room calculator.

Dividends and capital gains. Outside a registered account, dividends from Canadian companies are grossed up and then reduced by a dividend tax credit (eligible dividends are grossed up by 38%, with a federal credit of 15.0198% of the grossed-up amount). Only part of a capital gain is taxed, and only when you sell, so growth investments compound with less tax drag than interest. The capital gains tax calculator works out the tax on a sale.

US dividends in a TFSA. The United States withholds 15% of dividends paid to a Canadian resident who has filed a W-8BEN, or 30% without one. In a TFSA that tax cannot be recovered, so it lowers the compounding rate for good. An RRSP is exempt under the Canada-US tax treaty when you hold US-listed securities directly. Read more about US stocks in a TFSA.

9. Savings Goals: Work Backward From a Target

Use this calculator when you know the amount and the date and need the monthly figure. It compounds your rate yearly, converts it to a monthly rate and assumes deposits at the end of each month.

Short goals lean on deposits. Over three years at 3%, a $10,000 target needs $265.97 a month, or $9,574.92 of deposits ($265.97 x 36). Only $425.08 comes from interest. Over 10 years, $71.71 a month does it, with $8,605.20 of deposits ($71.71 x 120) and $1,394.80 of interest.

Where short-term money usually sits. Money you need within a few years is commonly kept in a high-interest savings account or GICs rather than in stocks, because a market drop just before the deadline could leave you short. Eligible deposits at a CDIC member are insured up to $100,000 per insured category per institution, and deposits held inside a TFSA, RRSP or FHSA are each a separate category. Our savings hub covers where to keep short-term money.

Home buyers. If the goal is a first home, the First Home Savings Account lets you deduct contributions like an RRSP and withdraw tax-free for a qualifying purchase. The RRSP Home Buyers’ Plan allows withdrawals of up to $60,000, repaid over 15 years. Both can be used for the same home.

10. What Rate to Use, and Where Rates Stand

Savings rates as of October 22, 2026. The Bank of Canada policy rate is 2.25%, unchanged since the cut that took effect on October 30, 2025. Among the accounts in our high-interest savings account table, everyday rates without a monthly plan fee reach 2.85%, and the best non-registered GIC rates in our GIC rate table are 3.85% for one year and 4.50% for five years. Promotional savings rates are higher for a few months and then drop, so model a promo with the regular rate unless you plan to move the money when it ends.

Investment returns. Stocks, bonds and funds have no posted rate. Their returns vary from year to year and can be negative. Run the compound interest calculator with a cautious, a middle and a hopeful assumption, for example 4%, 6% and 8%, and plan around the cautious one. The calculator assumes a steady return every month, which real markets never deliver.

Inflation. The calculator shows future dollars. To see a result in current buying power, subtract an assumed inflation rate from your return. With a 6% return and 2% inflation, run the tool at 4%: $10,000 over 25 years shows $27,137.65 in current dollars instead of $44,649.70 in future dollars. This is an approximation, and both rates here are assumptions.

A reality check. Treat every result from a compound interest calculator in Canada as a planning range, not a promise. Rates change, contributions slip and fees creep in. Re-run your numbers once a year with your actual balance. Our editorial standards explain how we check the rates and limits this page uses, and the step-by-step guide to investing in Canada covers what to do once your savings plan is set. For account-specific projections, try the RESP grant calculator for a child’s education or the RRIF minimum withdrawal calculator for retirement income.

10 Ways to Get More From Compound Interest

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