What return should I use?

Long-run diversified equity returns have historically landed near 6–8% before inflation. Any single decade can be very different, so test a lower rate too.

Where should this money sit in Canada?

Inside a TFSA, RRSP or FHSA where possible, so the growth is sheltered from tax.

Investing · Free tool

Compound Interest Calculator

Enter a starting amount, a monthly contribution, a return and a time horizon to see the balance grow — and how much of it you contributed versus earned.

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Starting amount

Monthly contribution

Years invested

years

Annual return

A long-term diversified portfolio has historically averaged 6–8%.

Balance after 0 years

You put in

Growth on top

0.0% of the final balance is growth, not your own money.

Rule of 72

—

Your money vs compound growth

Balance
What you put in

The widening gap is compounding — returns earning returns.

Final balance after 0 years

Enter amounts to see this chart.

Milestones

Year	Contributed	Balance	Growth

What this means

Time does most of the work: $0 of your final balance comes from growth. Starting five years earlier usually beats contributing more later.

How it works

Compounding means your returns start earning returns. The Rule of 72 is a quick shortcut: divide 72 by your annual return to estimate how many years your money takes to double.

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How compounding works

Growth earns growth. Early contributions have the longest time to multiply, which is why starting sooner usually beats contributing more later. The curve looks flat for years and then steepens sharply — most of the balance appears in the final third.

The Rule of 72

Divide 72 by the annual return to estimate the years it takes money to double. At 7%, that is roughly ten years — a quick mental check on any projection.

Real returns and inflation

A 7% return with 2% inflation is closer to 5% in purchasing power. For long-horizon goals, think in real terms so the future number means what you expect it to mean.

Common questions

What return should I use?: Long-run diversified equity returns have historically landed near 6–8% before inflation. Any single decade can be very different, so test a lower rate too.
Where should this money sit in Canada?: Inside a TFSA, RRSP or FHSA where possible, so the growth is sheltered from tax.

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Learn the ideas behind this tool

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