Budget Beavers

Compound Interest Calculator

Future value, required contribution, years to goal, required return — real vs. nominal.

For informational purposes only. Not financial advice. Returns shown are hypothetical — past performance is not indicative of future results. Calculations happen entirely in your browser.

Inputs

$
$ e.g. one coffee/day = $5 × 30
% 2025 · Source: NYU Stern / PWL Capital
Historical 60/40 portfolio avg · PWL Capital
30 yr
Inflation adjustment
Show real (inflation-adjusted) vs nominal values · default 2% · BoC target
% BoC target 2%
Final balance
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Enter your details to project growth
Total contributed Everything you put in: starting amount plus all monthly contributions over the full horizon.
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Total growth Compound growth only — the difference between your final balance and everything you contributed. This is money the market added.
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Growth multiple Final balance ÷ total contributions. A 3× multiple means every dollar you invested turned into three.
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Doubles every 72 ÷ annual return rate = years to double. At 7%, money doubles every ~10.3 years. At 10%, every ~7.2 years.
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Rule of 72

The Snowball Effect

Display:
Blue = cumulative contributions · Green = compound growth

The math behind your result

Every number on this page is derived from the exact Canadian regulatory formula — not approximations or estimates. The calculation runs entirely in your browser using the inputs you provided. Expand the section below to verify the math step-by-step, or share the URL to reproduce these exact results.

▶ How is this calculated?

Monthly compound growth formula

monthlyRate = (1 + annualRate)^(1/12) - 1

// Each month:
balance = balance × (1 + monthlyRate) + monthlyContribution

// Closed form (N = years × 12):
FV = principal × (1 + r)^N + contribution × ((1 + r)^N - 1) / r

Inflation adjustment

realValue = nominalValue / (1 + inflationRate)^years

// Example: $227,000 nominal at 2% inflation over 30yr
// realValue = $227,000 / (1.02)^30 = ~$125,000

Rule of 72

doublingYears ≈ 72 / (annualRate × 100)
// At 7%: 72 / 7 ≈ 10.3 years
// At 10%: 72 / 10 = 7.2 years

Tax drag

For non-registered accounts, dividends and distributions are taxed annually even if unreinvested. This is modelled as a reduction to the effective return: effectiveRate = annualRate × (1 - taxDragRate). TFSA and RRSP accounts have no tax drag — leave the field at 0%.

About the Compound Interest Calculator

Why compound growth is the most important concept in personal finance

Compound growth is often called the "eighth wonder of the world." The mechanism is simple: your investment earns returns, and then those returns earn returns on themselves. In the early years, the effect is modest. But as time extends, growth accelerates exponentially — the "snowball" rolling down a hill. The most critical variable is not your return rate or even your monthly contribution. It is time. Starting 10 years earlier at the same monthly amount often produces more than doubling your monthly contribution and starting later.

The Rule of 72 — a mental shortcut

Divide 72 by your annual return rate (as a percentage) to estimate years to double your money. At 7%, you double every ~10.3 years. At a 3.5% GIC or savings account, every ~20.6 years. The Rule of 72 makes it visceral: a 7% portfolio held 30 years doubles roughly three times, turning $1 into about $8 — before any additional contributions.

What return rate to use?

Common benchmarks for Canadian investors (nominal, pre-inflation):

For long-term planning, most Canadian financial planners use 6–7% for an equity-heavy registered account (TFSA/RRSP invested in low-cost index ETFs). The 7% default on this calculator reflects the PWL Capital / Canadian Couch Potato methodology.

Nominal vs real (inflation-adjusted) returns

"Nominal" means the raw dollar balance — what the account will say on your screen in 30 years. "Real" means purchasing power — what that same balance is worth in today's dollars, after accounting for inflation eroding the value of money over time. At 2% inflation (the Bank of Canada's target), $100 today will only buy about $55 worth of goods in 30 years. Toggling between nominal and real gives you an honest view of what your future balance actually means for your lifestyle.

TFSA vs RRSP: which account is this for?

This calculator projects portfolio growth regardless of account type. However, the tax treatment differs: RRSP contributions reduce your taxable income today but withdrawals are taxed; TFSA contributions don't reduce taxable income but all growth and withdrawals are completely tax-free. The TFSA vs RRSP calculator models the specific tax impact of each account given your marginal rate — use it alongside this tool to optimize where your monthly contribution goes.

Not financial advice. Return rates shown are historical averages; future returns are not guaranteed and may be significantly lower. This calculator provides estimates for informational and educational purposes only. Consult a registered financial advisor before making investment decisions. All calculations happen in your browser — no data is sent anywhere.

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