Calculate how your investments grow with compound interest over time. This free compound interest calculator shows the power of long-term investing for RRSPs, TFSAs, and other Canadian investment accounts.
Understanding Compound Interest
Compound interest is often called the "eighth wonder of the world" - it's the process where your investment earnings generate their own earnings. This calculator shows how your money grows exponentially over time.
How Compound Interest Works
- Year 1: You earn interest on your initial investment
- Year 2: You earn interest on your original investment PLUS the interest from year 1
- Year 3+: The growth accelerates as earnings compound on earnings
Maximizing Compound Growth in Canada
Canadians can optimize compound growth through:
- TFSA Investments: Tax-free compound growth for life
- RRSP Contributions: Tax-deferred compound growth until withdrawal
- Regular Contributions: Dollar-cost averaging smooths market volatility
- Long Time Horizons: More time = more compounding periods
Investment Account Options
TFSA: Ideal for compound growth as all gains are tax-free forever.
RRSP: Tax deduction now, compound growth, taxed on withdrawal.
Non-registered: Taxed annually on dividends/interest, capital gains on sale.