Start with $10,000, add $300 a month at 6% for 20 years, compounded monthly, and you end up with about $171,714. Counting the starting amount, you put in $82,000. The other $89,714 is interest. Change any input above to see your own result.
What compound interest is
It is interest earned on your starting amount and also on interest already added. Each period the balance grows a bit more, so the next interest payment is bigger. Over long stretches this snowball effect counts for more than the rate alone.
The formula behind it
For a single amount, the value is the start times one plus the rate per period, raised to the number of periods. With contributions, each deposit grows for as long as it stays in the account. The calculator adds contributions at the end of each month and compounds at the interval you choose.
Check it with the example. Monthly, the rate is 6% divided by 12, or 0.5%, over 240 months. Alone, the $10,000 start grows to about $33,102 on its own. Deposits of $300 add about $138,612, which together make $171,714. Mixing up the annual and monthly rate is a common mistake, so enter the rate as a yearly figure.
Time beats amount
Starting early usually wins over saving more later. By the rule of 72, a balance at 6% doubles about every 12 years. Ten extra years of growth can be worth more than several years of bigger deposits. Change the years and see the gap for yourself.
Compounding frequency and real returns
More frequent compounding pays slightly more, with yearly the lowest and daily the highest. At typical rates the gap is small, so pick whatever your account uses. The 6% return is a nominal rate, too, and inflation lowers what the money can buy. At 2% inflation the real return is closer to 4%. Use a rate net of fees and taxes for a fair estimate, and remember that investments move up and down, so actual results will vary.
The year-by-year table
For each year the table shows what you have paid in, the interest earned so far and the balance at year end. Early on, most growth comes from your contributions. Later interest takes over and can exceed what you add each year. Scan the balance column for the year you need the money. If it falls short, raise the monthly amount or extend the years. One clear target, such as $100,000 in ten years, makes the choice easier.
Starting at 25 or at 35
Save $300 a month from age 25 to 65 at 6% and you finish with about $600,000. Start at 35 and you finish with about $300,000, half as much, even though you paid in three quarters as much money. The extra ten years of growth make the difference. Try both cases in the years field.
Small changes to the rate matter more than they look. Take the same plan at 5% instead of 6%, and the twenty-year balance drops well below $171,714. Test a cautious rate and a hopeful one side by side, then plan around the cautious one. Deposits that are missed or paused also shrink the total, because each skipped $300 loses the growth it would have earned. Regular deposits, even small ones, do most of the work.
Fees and taxes
A fee of 2% a year takes a big bite out of long-term growth, and low-cost funds let you keep more. Taxes count as well. Growth in a TFSA or RRSP compounds without yearly tax, while growth in a taxable account is trimmed every year.
Where to go next
Shelter growth from tax with the TFSA calculator or the RRSP calculator. Plan for later years in the retirement calculator. For simple interest and other cases, the interest calculator fits better.
Frequently asked questions
How does compound interest work?
Interest is earned on your balance and on the interest already added, so growth speeds up over time.
How much will $300 a month grow to?
At 6% for 20 years, with a $10,000 start, about $171,714.
Does compounding frequency matter?
Slightly. More frequent compounding pays a little more.
What is the rule of 72?
Divide 72 by the rate to estimate the years to double. At 6% it is 12 years.
Are these returns guaranteed?
No. Investment returns change from year to year.
When are contributions added?
At the end of each month in this calculator.
Sources and updates
Last reviewed: . Full disclaimer. How we build calculators. Editorial policy.
Estimate only. This calculator gives general information for planning. It is not tax, legal or financial advice, and it is not affiliated with the City of Toronto, MPAC or the Canada Revenue Agency. Results depend on the numbers you enter and may differ from official amounts. Check official sources or a qualified professional before you decide.