Working hard in the background...
Working hard in the background...
See exactly how your investments grow over time. Model regular deposits, withdrawals, and any compounding frequency ā from daily to yearly ā and watch the math work in your favour.
Compound interest is often called the eighth wonder of the world, and for good reason. When your returns start earning returns of their own, your balance doesn't grow in a straight line ā it accelerates. A $10,000 investment earning 7% annually becomes about $19,672 after 10 years, but nearly $76,123 after 30 years. The extra 20 years produce almost eight times as much growth as the first 10. That's compounding at work.
The two biggest levers are time and rate of return. Starting five years earlier often matters more than contributing a larger amount later, because every dollar gets more time to compound. Use this calculator to compare scenarios side-by-side and see which levers move your number the most.
Compound interest is the return you earn on both your original investment and on the returns that investment has already generated. Instead of earning the same amount each period, your balance grows faster over time because each period's returns are added to the principal and start earning returns of their own. This snowball effect is why long time horizons are so powerful ā the majority of your final balance typically comes from compounding, not from the money you contributed.
Start in Step 1 by setting your initial investment, an expected annual return rate (7% is a common long-term stock market average), your compounding frequency, and the time horizon. In Step 2, add regular deposits or withdrawals if they apply ā you can also model an annual increase to your deposits to match salary growth. The Growth Projection tab shows how your balance evolves, and the Period Breakdown tab gives you a row-by-row view of every year or month.
For a lump sum with no contributions, the future value is A = P Ć (1 + r/n)^(n Ć t), where P is your principal, r is the annual interest rate (as a decimal), n is the number of compounding periods per year, and t is the number of years. When you add deposits or withdrawals, this calculator iterates month-by-month ā adjusting the balance for contributions, compounding at the appropriate frequency, and computing running totals. This matches how real investment accounts behave.
The more often your returns are compounded, the higher your effective annual return. A 7% rate compounded monthly produces a higher final balance than the same 7% compounded yearly, because each month's gain immediately starts earning its own return. The calculator shows both your nominal annual rate and your effective annual rate (EAR) so you can see the difference.
It depends on the investment. Canadian high-interest savings accounts typically offer 2ā5%, GICs 3ā5%, a balanced portfolio of stocks and bonds has historically returned around 6ā7%, and a broad stock market index around 7ā10% before inflation. Use a realistic long-term average for your expected mix, and consider running multiple scenarios to see how sensitive your plan is to the rate.
No. This calculator assumes a constant annual return, but real markets are volatile ā returns vary year to year and past performance doesn't guarantee future results. The projections are a planning tool to show the mathematical potential of compounding, not a forecast. For cash products like savings accounts and GICs the rate is typically fixed, but for stocks and ETFs the return you actually earn will differ from any fixed rate you enter.