Compound Interest

Compound interest is interest which is calculated not only on the initial principal investment, but also the accumulated interest of prior periods.

Grow your Money

Since 100% of the earnings can be reinvested, the growth of your RRSP increases rapidly over the years.

Turn $100 a month into over $320,000

For example, you put $100 per month into an RRSP. That's $1,200 per year, and thanks to the first year's interest it quickly becomes $1243.49.

In ten years you've built yourself a tidy sum of $18,012.42. But it gets better. Thanks to tax-sheltered interest earnings, your RRSP is now actually making more money than you are putting in.

You've doubled up! Just take a look at the chart, at the shaded rows, and you'll see how fast the amount builds up over ten, twenty, thirty, and forty years.

  Year Your
Annual Deposit
Inerest
Earned
This Year
Your RRSP
at the End
of the Year
  1 1,200.00   43.39   1,243.39  
  2 1,200.00   142.86   2,586.25  
  3 1,200.00   250.29   4,036.54  
  4 1,200.00   366.31   5,602.85  
  5 1,200.00   491.62   7,294.47  
  6 1,200.00   626.95   9,121.41  
  7 1,200.00   773.10   11,094.51  
  8 1,200.00   930.95   13,225.46  
  9 1,200.00   1,101.43   15,526.89  
  10 1,200.00   1,285.54   18,012.43  
  11 1,200.00   1,484.38   20,696.81  
  12 1,200.00   1,699.13   23,595.94  
  13 1,200.00   1,931.06   26,727.01  
  14 1,200.00   2,181.55   30,108.56  
  15 1,200.00   2,452.07   33,760.63  
  16 1,200.00   2,744.24   37,704.87  
  17 1,200.00   3,059.78   41,964.65  
  18 1,200.00   3,400.56   46,565.21  
  19 1,200.00   3,768.61   51,533.81  
  20 1,200.00   4,166.09   56,899.91  
  21 1,200.00   4,595.38   62,695.29  
  22 1,200.00   5,059.01   68,954.30  
  23 1,200.00   5,559.73   75,714.03  
  24 1,200.00   6,100.51   83,014.54  
  25 1,200.00   6,684.55   90,899.10  
  26 1,200.00   7,315.32   99,414.41  
  27 1,200.00   7,996.54   108,610.95  
  28 1,200.00   8,732.26   118,543.22  
  29 1,200.00   9,526.85   129,270.06  
  30 1,200.00   10,384.99   140,855.06  
  31 1,200.00   11,311.79   153,366.85  
  32 1,200.00   12,312.74   166,879.59  
  33 1,200.00   13,393.76   181,473.34  
  34 1,200.00   14,561.26   197,234.60  
  35 1,200.00   15,822.16   214,256.76  
  36 1,200.00   17,183.93   232,640.69  
  37 1,200.00   18,654.64   252,495.33  
  38 1,200.00   20,243.02   273,938.35  
  39 1,200.00   21,958.46   297,096.80  
  40 1,200.00   23,811.13   322,107.93  

The above example is based on an 8% annual rate of return and is used for illustration purposes only. Actual returns may vary.

 

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