Compound Interest Calculator
See how your investment grows over time with the power of compounding. Add monthly contributions to accelerate your wealth.
| Year | Balance | Contributed | Interest |
|---|
The Rule of 72
Divide 72 by your annual interest rate to estimate how many years it takes to double your money.
Historical Return Benchmarks
| Investment | Avg Annual |
|---|---|
| S&P 500 (historical) | ~10% |
| Diversified portfolio | 5–7% |
| Canadian bonds | 3–5% |
| GIC (2026) | 3–5% |
| HISA (2026) | 2–4% |
Past returns do not guarantee future results. For educational purposes only.
Compound Interest Calculator FAQ
Compound interest works by earning interest on both your principal and all previously accumulated interest. A $1,000 investment at 7% becomes $1,070 after year one, then $1,144.90 after year two — you earned $74.90 in year two versus $70 in year one. Over decades, this snowball effect creates exponential growth. Starting 10 years earlier often doubles the final result more than doubling the contribution amount.
Simple interest is calculated only on the original principal. Compound interest is calculated on the principal plus all accumulated interest. A $10,000 investment at 6% for 20 years: simple interest yields $22,000 total; monthly compound interest yields $33,102. The difference grows wider over longer periods — this is why compound interest is called the "eighth wonder of the world."
More frequent compounding produces higher returns, but the differences are smaller than most people expect. Annual compounding at 6% on $10,000 for 10 years yields $17,908. Monthly compounding yields $18,194. Daily yields $18,221. The difference between monthly and daily is only $27. When choosing investment accounts, low fees and consistent contributions matter far more than compounding frequency.
The Rule of 72 is a quick mental math shortcut to estimate how long it takes to double your money. Divide 72 by your annual return rate. At 6% annual return: 72 ÷ 6 = 12 years to double. At 8%: 9 years. At 10%: about 7.2 years. It works best for rates between 6–10% and is less accurate at very high or very low rates. It also works in reverse — 72 ÷ years = approximate rate needed to double.
Use 5–7% for a balanced diversified portfolio, 8–10% for equity-heavy portfolios based on historical S&P 500 averages, and 3–5% for conservative options like Canadian GICs or bonds. For inflation-adjusted (real) returns, subtract roughly 2–3% from nominal rates. Remember: past returns don't guarantee future results. Consult a licensed financial advisor for personalized guidance before making investment decisions.
About This Compound Interest Calculator
Compounding is the fundamental math behind long-term wealth building. Unlike simple interest — which only earns on your original principal — compound interest earns on the full accumulated balance, including all prior interest. The longer the time horizon and the higher the rate, the more dramatic the effect. A $10,000 investment at 7% for 30 years grows to roughly $76,000 with no additional contributions. Add $500 per month and that becomes over $600,000. This calculator shows you both the year-by-year trajectory and the overall breakdown between contributed principal and interest earned.
The compounding frequency dropdown lets you compare monthly, quarterly, semi-annual, annual, and daily compounding. In practice, most Canadian investment accounts — TFSAs, RRSPs, mutual funds, ETFs — reinvest returns continuously or monthly, which approximates monthly or daily compounding. The difference between monthly and daily is minimal for most investors; the gap between annual and monthly is larger over long periods.
Projections here assume a constant rate of return, which is a simplification. Real investment returns vary year to year, and sequence-of-returns risk — earning lower returns in early years versus late years — matters significantly for retirement planning. Use these numbers as planning benchmarks, not predictions. All investment decisions should consider your individual risk tolerance, time horizon, and financial goals. For personalized advice, consult a licensed financial advisor registered with IIROC or the MFDA.