The concepts
behind the numbers.
Not financial advice — just the math and context behind what this tool calculates.
How compound interest works
Every month, you earn interest on what you deposited — and on the interest you already earned. That feedback loop, given enough time, is the entire engine behind long-term wealth building.
Guides
The two accounts every Canadian saver compares, the tax math that actually decides between them, and where the FHSA fits in. Includes the 2026 contribution limits and the mistakes that trigger CRA penalties.
A one-line formula that tells you how many years it takes your money to double. Why it works, where it breaks down, and what it says about starting early.
Investing a windfall all at once beats spreading it out about two thirds of the time. So why does dollar cost averaging still win for most people?
The First Home Savings Account combines an RRSP-style deduction with TFSA-style tax-free withdrawals. Here is how the rules work and how to plan a down payment around it.
What the return rate slider means
The rate slider runs from 4–15%. Here's context for what real Canadian-accessible assets have historically delivered. These are historical reference ranges, not predictions.
Compound interest is one of the most straightforward ideas in personal finance: your returns generate their own returns over time. This section breaks down how compounding works, why starting early matters more than saving large amounts, and how Canadian accounts like the TFSA and RRSP are designed to let compounding work in your favour.
Frequently asked questions
Compound interest means your investment returns generate their own returns. A dollar of interest earned this month becomes part of your balance and earns interest next month. For Canadians using a TFSA or RRSP, this process runs tax-free or tax-deferred for decades, which is why account type and time horizon often matter more than picking individual investments.
A TFSA is a registered account wrapper, not a product. You can hold cash, GICs, ETFs, stocks, and bonds inside it. The defining feature is that all growth and withdrawals are completely tax-free. A regular savings account holds cash and pays interest that is taxed as income each year. Holding a high-interest savings account inside a TFSA combines the liquidity of cash with the tax-free treatment of the registered account.
A broadly diversified all-equity ETF tracking global markets (such as XEQT or VEQT) has historically returned approximately 7–10% annually in nominal terms. A balanced ETF (60% equity / 40% bonds) is closer to 5–7%. High-interest savings accounts currently offer 3–5%. These are historical reference ranges, not predictions, and all figures are before inflation. Canada's long-run inflation target is 2%, so subtract roughly that amount to estimate real purchasing power growth.
Because compounding is exponential. Each additional year of growth doubles down on a larger base, so the first dollar invested in your 20s eventually does far more work than a dollar added in your 40s. The Rule of 72 makes this concrete: at a 7% return, money doubles roughly every 10 years. A 25-year-old has time for three or four doublings before retirement; a 45-year-old has time for one or two. Starting small and early consistently beats starting large and late in the modelling.