Canada
Compound interest calculator
Compounding is the engine behind long-term saving: you earn a return, then earn a return on that return, and the snowball builds. This tool projects where a pot lands once that effect runs for years. Give it a starting amount, an annual rate, the number of years, and (if you like) a regular monthly top-up. It reports the projected balance at the end, the total you actually paid in, and the slice that is pure growth. It is useful for sizing a savings plan, a long-term investment or a child fund.
| Starting amount | $10,000 |
| Monthly top-ups added | $12,000 |
| Interest earnedcompounded monthly | $9,998 |
| Future balance | $31,998 |
How it works
- Interest is credited at regular intervals (monthly here), and each new interval is calculated on the larger, already-grown balance.
- Any monthly contribution is dropped in along the way, so those deposits also start compounding from the moment they land.
- Earlier money compounds for longer, which is why starting sooner beats saving more later in most cases.
- The growth figure shown is the closing balance minus every penny you contributed, including the opening amount.
- A higher rate or a longer horizon both lift the result, and the gap widens sharply the further out you look.
FV = P(1 + r)^n + PMT x ((1 + r)^n - 1) / r
The lump sum P grows by the periodic rate r across n periods, giving the first term. Each monthly deposit PMT lands at a different point, so the second term sums a growing string of deposits, each compounding for whatever time remains. Here r is the annual rate split into twelve monthly steps, and n is the number of years times twelve. When the rate is zero the second term collapses to PMT times n, plain saved cash.
- FV
- projected balance at the end of the term
- P
- principal, the amount you start with
- PMT
- fixed amount added each month
- r
- monthly rate, the annual rate divided by 12
- n
- number of monthly periods, years times 12
How a single 10,000 lump sum grows at 5%
| After 10 years | 16,470 | 6,470 of it is growth |
| After 20 years | 27,126 | past double the start |
| After 30 years | 44,677 | growth now dwarfs the deposit |
| Years to roughly double | 14 | Rule of 72: 72 divided by the rate |
Worked example
10,000 to start, 100 added monthly for 5 years at 0% (no growth) lands at exactly 16,000, which is all contributions and no interest. Switch the rate to 5% and the same plan finishes higher, because both the lump sum and each deposit earn compounding returns over the five years.
Key facts
- The Rule of 72 gives a quick estimate of doubling time: divide 72 by the percentage rate, so 6% doubles a pot in about twelve years.
- Growth is exponential, not linear, so the curve bends upward and the final years add far more than the first ones.
- Compounding monthly rather than once a year produces a slightly higher result for the same headline rate.
- On a regular top-up plan, the earliest deposits do most of the heavy lifting because they compound the longest.
Tips
- Begin as early as you can. A few extra years at the start usually beats a larger sum paid in later.
- Hold the rate steady when you compare two plans, then change only the years or the monthly amount to see what each lever does.
- Treat the result as a before-tax, before-inflation figure and discount it in your head for what the money will actually buy.
- For a long horizon, even a one-point difference in rate is worth chasing, since the gap compounds year after year.
Same plan, different rate: 10,000 start plus 200 a month for 10 years
| Annual rate | Paid in | Growth | Final balance |
|---|---|---|---|
| 3% | 34,000 | 7,442 | 41,442 |
| 5% | 34,000 | 13,527 | 47,527 |
| 7% | 34,000 | 20,714 | 54,714 |
Frequently asked questions
How does compound differ from simple interest?+
Simple interest is paid only on the original sum. Compound interest is paid on the original sum plus all the interest already added, so the balance accelerates rather than growing in a straight line.
How often does this compound?+
Monthly. For a given annual rate, compounding more frequently nudges the final figure up slightly, since interest starts earning interest sooner within the year.
Are inflation and tax taken out?+
No. The projection is nominal. What the balance actually buys, and any tax on the returns, depend on inflation and the rules where you live.
Why does the rate matter so much over time?+
Compounding multiplies, it does not add. A couple of extra percentage points, left to run for decades, can change the outcome dramatically because each year builds on the last.
Things to watch
- A fixed rate is an assumption, not a promise. Real markets move up and down, and a bad run early can leave you behind this projection for years.
- Inflation quietly erodes the purchasing power of the final figure, so a balance that looks large may buy less than it appears.
- The maths assumes every deposit is made on time and nothing is withdrawn. Skipped contributions or early withdrawals lower the outcome.
Last updated: 2026-01-01
This is an estimate for general guidance, not financial, tax, legal or medical advice. Figures can change and individual circumstances vary. Always confirm with the official sources listed before making decisions.
- This is general information, not financial advice.
- A projection at a fixed rate, not a guarantee. Real investment returns vary and can be negative in some years.
- Returns may be taxed and are not adjusted for inflation.
Reviewed by Vikas Dulgunde.