Compound interest calculator
Long-run growth of regular deposits + a starting balance. Use it to project FHSA, TFSA, RRSP, or non-registered investment growth.
Your scenario
Result
Compound interest — the only math you really need
Compound interest is what happens when your investment returns generate their own returns. Albert Einstein supposedly called it “the eighth wonder of the world.” Whether he did or not, the math is the strongest single force in long-term wealth building — and the longer you compound, the more dramatic the outcome.
The formula
Future value = (starting balance × (1 + r)^n) + monthly contributions × ((((1 + r)^n) − 1) / r), where r is the periodic return and n is the number of periods. This calculator handles it for you — but the key intuition is that the late years contribute disproportionately to growth, because that's when your accumulated balance is largest.
Real Canadian examples
- $500/month for 30 years at 6%: $502,000 future value, of which $322,000 is growth (you contributed only $180,000)
- $500/month for 40 years at 6%: $996,000 — nearly double the 30-year result for just 33% more time
- $1,000/month for 25 years at 7%: $811,000, of which $511,000 is growth
- $200/month for 35 years at 6%: $284,000 — small contributions still compound dramatically over a long horizon
Which account to use in Canada
- FHSA — Tax-deductible contributions and tax-free growth, $8,000/yr up to $40,000 lifetime, for first home only
- TFSA — No tax deduction but tax-free growth, $7,000/yr in 2026 (cumulative limit since 2009 = $102,000)
- RRSP — Tax-deductible contributions and tax-deferred growth, 18% of earned income up to a cap, taxed on withdrawal
- Non-registered — No contribution limit but no tax shelter; growth taxed as capital gains or interest
For most Canadians under 40 saving for a home, the priority is FHSA → TFSA → RRSP. If you're using the RRSP Home Buyers' Plan, the RRSP can pull double duty.
Why “just save more” loses to “start earlier”
Consider two savers:
- Saver A: contributes $500/month from age 25 to age 35, then stops. Total contributed: $60,000.
- Saver B: contributes $500/month from age 35 to age 65. Total contributed: $180,000.
At 7% return, by age 65 Saver A has roughly $602,000 and Saver B has roughly $611,000. Saver A contributed one-third the money, stopped 30 years earlier — and is essentially even. That's the power of compounding.
The realistic-return debate
What return should you use? Long-run Canadian equity returns have averaged ~7% (after inflation, ~9% nominal). A balanced portfolio averages ~6% nominal. Cash and GICs run 3–5%. Be honest with yourself: assume 5–7% real for a long-horizon equity plan, lower for shorter horizons.