See how your savings grow with compound interest. Add an initial deposit and regular contributions, choose how often interest compounds, and get the future value, total interest earned, the inflation-adjusted value and a year-by-year breakdown.
| Year | Total contributions | Interest earned | Balance |
|---|
What is compound interest?
Compound interest is interest earned on your original money and on the interest it has already earned. Each period, interest is added to the balance, so the next period’s interest is calculated on a bigger amount. Over long periods, this snowball effect does most of the work: in the default example above, interest ends up larger than everything you contributed.
Compound interest formula
A = P × (1 + r/n)n × t
A = final amount · P = initial deposit · r = annual rate (as a decimal) · n = compounding periods per year · t = years
With regular contributions (PMT) made at the end of each period, add the future value of the contributions:
FV = PMT × [((1 + i)N − 1) ÷ i]
i = rate per contribution period · N = total number of contributions
Example: $10,000 at 7% compounded annually for 30 years grows to $76,122.55 with no further deposits. Add $500 a month with monthly compounding and it reaches $691,150.47: $190,000 contributed and $501,150.47 in interest.
Time is the biggest factor
Same example ($10,000 + $500/month at 7%), checked at different points:
| After | Contributed | Interest earned | Balance |
|---|---|---|---|
| 10 years | $70,000.00 | $36,639.02 | $106,639.02 |
| 20 years | $130,000.00 | $170,850.72 | $300,850.72 |
| 30 years | $190,000.00 | $501,150.47 | $691,150.47 |
The last 10 years add more interest than the first 20 combined.
Starting early vs starting late
Investing $300 a month at 7% until age 65:
| Start at age | Total contributed | Interest earned | Balance at 65 |
|---|---|---|---|
| 25 | $144,000.00 | $643,444.02 | $787,444.02 |
| 35 | $108,000.00 | $257,991.30 | $365,991.30 |
| 45 | $72,000.00 | $84,278.00 | $156,278.00 |
Starting 10 years earlier costs only $36,000 more in contributions but more than doubles the final balance.
How the interest rate changes the result
$10,000 plus $200 a month for 20 years, compounded monthly:
| Rate | Balance after 20 years |
|---|---|
| 4% | $95,580.75 |
| 6% | $125,510.22 |
| 8% | $167,072.11 |
| 10% | $225,154.50 |
Does compounding frequency matter?
$10,000 at 6% for 10 years, no contributions:
| Compounding | Final balance |
|---|---|
| Annually | $17,908.48 |
| Semi-annually | $18,061.11 |
| Quarterly | $18,140.18 |
| Monthly | $18,193.97 |
| Daily | $18,220.29 |
| Continuously | $18,221.19 |
More frequent compounding helps, but the gain shrinks fast. Going from annual to monthly adds about $285 here; from monthly to daily, only about $26. The rate and the time invested matter far more. When comparing savings accounts or GICs, look at the effective annual rate, which already includes compounding.
The rule of 72
Divide 72 by your annual rate to estimate how many years it takes to double your money. At 6%, money doubles in about 12 years; at 8%, about 9 years; at 3%, about 24 years.
Don’t forget inflation and taxes
A future balance buys less than the same amount today. With 2.5% inflation, the $691,150.47 from the main example is worth about $329,500 in today’s dollars after 30 years. Taxes also reduce growth in a regular (non-registered) account. In Canada, growth inside a TFSA is tax-free and growth inside an RRSP is tax-deferred, which lets compounding work on the full amount.
Frequently asked questions
How do you calculate compound interest?
Use A = P × (1 + r/n)^(n × t), where P is the starting amount, r the annual rate as a decimal, n the number of compounding periods per year and t the number of years. For regular deposits, add the future value of each contribution. The calculator does both automatically.
How much is $10,000 worth after 10 years at 6%?
About $17,908 with annual compounding and $18,194 with monthly compounding, without any additional deposits.
How much will $500 a month be worth in 30 years?
At 7% compounded monthly, $500 a month grows to about $609,985 after 30 years. With an extra $10,000 deposited at the start, the total is about $691,150.
What is the difference between simple and compound interest?
Simple interest is paid only on the original amount. Compound interest is paid on the original amount plus the interest already earned, so the balance grows faster over time.
Is daily compounding better than monthly?
Slightly. At 6% over 10 years, $10,000 earns about $26 more with daily compounding than with monthly compounding. The rate and the time invested make a much bigger difference.
What rate of return should I use?
Use the rate on your savings account or GIC for guaranteed products. For a diversified long-term investment portfolio, many people test several rates, for example 4%, 6% and 8%, because returns are not guaranteed and vary from year to year.
Does this calculator include taxes and fees?
No. It shows growth before taxes and fees. Investment fees and taxes on interest in a non-registered account reduce your real return.
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Disclaimer: Results are estimates for information only and are not financial advice. Investment returns are not guaranteed. For unbiased information on saving and investing in Canada, see the Financial Consumer Agency of Canada.