Compound Interest Calculator Canada

See how a starting amount and regular contributions grow over time, after fees and inflation, and how a TFSA, RRSP or taxable account changes what you keep.

✓ 2026 rates · verified Oct 21–27, 2026

How compound interest works

Compound interest pays interest on your interest. In the first year, $10,000 at 6% compounded yearly earns $600.00. In the second year the 6% applies to $10,600.00, so it earns $636.00; in the third, $674.16. Each year’s interest is a little bigger than the last.

After 10 years the $10,000 has grown to $17,908.48: $7,908.48 of growth, without adding a dollar. The formula is balance = amount × (1 + rate)years, here 10,000 × 1.06¹⁰.

Regular contributions compound too: each one starts growing from the period it goes in. The calculator works out each contribution period’s rate from your yearly rate and how often it compounds, then adds the starting amount’s growth to the growth of every contribution.

How often interest compounds, and why it matters less than you’d think

Interest that compounds more often grows slightly faster, because each period’s interest starts earning sooner. But the effect is small. $10,000 at 6% for 10 years:

Daily compounding beats yearly by only $311.81. Getting 7% instead of 6%, compounded yearly, adds $1,763.03, and leaving the money 25 years instead of 10 more than triples the growth. Rate and time matter far more than the compounding schedule.

How fees add up

A fund’s management expense ratio (MER) comes out of your return every year, whether the fund does well or not, so it compounds against you. This calculator subtracts the fee from the yearly return. $100,000 at 7% a year, compounded yearly, for 25 years:

A 2% fee looks small next to a 7% return, but it takes 38% of the final balance: $204,107.77, more than the $100,000.00 you started with. The cost includes the growth the fees would have earned had they stayed invested.

TFSA vs RRSP vs taxable: where the same investment grows fastest

Take $10,000 for 10 years for someone in Alberta with $60,000 of other income, where the next dollar of interest is taxed at 28.5% (federal plus provincial).

• TFSA: at 4% interest it grows to $14,802.44 and every dollar is yours. Growth and withdrawals are tax-free.
• Taxable account: the same interest is taxed every year, so only 2.86% a year compounds, leaving $13,257.61, $1,544.83 less.
• RRSP: it grows like the TFSA, to $14,802.44, but withdrawals are taxed: at 25% you’d keep $11,101.83. That leaves out the tax refund you get for contributing, which is what usually makes an RRSP worth it; the RRSP calculator works that out, and the RRSP vs TFSA calculator compares the two properly.

Stocks are taxed more lightly. At 7% a year with a 2% yield in eligible Canadian dividends (taxed at 7.4% at this income, thanks to the dividend tax credit) and the growth taxed only when sold, $10,000 becomes $18,390.24 after selling, against $19,671.51 in a TFSA. Only 50% of a capital gain is taxed, and the calculator runs it through the full tax engine in the year you sell, so a large gain can reach a higher bracket.

How this is calculated

1. Fees come off the yearly return: rate after fees = rate − fee.
2. The rate for each contribution period is (1 + yearly rate ÷ compounding periods)^{compounding periods ÷ contributions a year} − 1, which handles contributions and compounding on different schedules.
3. Starting amount: amount × (1 + period rate)^periods. Contributions: contribution × ((1 + period rate)^periods − 1) ÷ period rate, times (1 + period rate) when you contribute at the beginning.
4. Today’s dollars: the balance ÷ (1 + inflation)^years.
5. Taxable accounts: the tax engine works out the federal and provincial tax on $1,000 more interest and on $1,000 more eligible dividends at your other income (no CPP or EI). Interest is taxed each year at that rate; dividends too, and what’s left is reinvested. Growth on stocks is taxed in the final year by adding 50% of the gain to that year’s income. The adjusted cost base is your contributions plus reinvested after-tax dividends.
6. Everything is calculated at full precision and rounded to the cent only for display.

The default inflation rate is the Bank of Canada’s target, “the 2 percent mid-point of the 1 to 3 percent inflation-control range” (Government of Canada and Bank of Canada – Joint statement on the renewal of the monetary policy framework (December 2021)). That agreement runs to December 31, 2026.

What this calculator assumes

• The same rate of return every year, and the same contribution every period (contributions don’t rise with inflation).
• Fees are subtracted from the yearly return.
• TFSA and RRSP limits are shown as notes only. The RRSP balance doesn’t include the tax refund on contributions, and tax on withdrawal uses the single rate you enter.
• Taxable accounts: your other income stays the same each year and is treated as employment income; 2026 tax rates apply in every year; dividends are eligible Canadian dividends (no foreign dividends); no capital losses; no Old Age Security clawback.

Rates for tax year 2026, verified October 21 to October 27, 2026 · Page updated October 28, 2026