Compound Interest Calculator
Compare how your investments grow in a TFSA, RRSP, or non-registered account. See the impact of tax-free growth, tax-deferred growth, and annual tax drag on your long-term returns.
Investment Details
TFSA
Post-tax contributions, completely tax-free growth and withdrawals
- Final Balance
- $301,888
- Total Contributions
- $130,000
- Total Growth
- $171,888
- Tax Paid on Growth
- $0
- After-Tax Value
- $301,888
RRSP
Tax-deductible contributions, tax-deferred growth, taxed on withdrawal
- Final Balance
- $301,888
- Total Contributions
- $130,000
- Total Growth
- $171,888
- Tax Paid on Growth
- $0
- After-Tax Value
- $213,374
Non-Registered
No tax advantages — growth taxed annually at your marginal rate (simplified model)
- Final Balance
- $233,332
- Total Contributions
- $130,000
- Total Growth
- $103,332
- Tax Paid on Growth
- $42,865
- After-Tax Value
- $233,332
After-Tax Comparison
TFSA yields $88,514 more than the lowest after-tax option over this period.
How Canadian Account Types Affect Compound Growth
TFSA (Tax-Free Savings Account): Contributions are made with after-tax dollars, but all investment growth — interest, dividends, and capital gains — is completely tax-free. Withdrawals are tax-free and don't count as income, so they don't trigger OAS clawback or affect other benefits.
RRSP (Registered Retirement Savings Plan): Contributions are tax-deductible, reducing your taxable income in the year you contribute. Investments grow tax-deferred. However, all withdrawals are taxed as ordinary income, and they count toward the OAS clawback threshold.
Non-Registered Account: No contribution limits or tax sheltering. Investment income is taxed annually — interest at your full marginal rate, eligible dividends with a gross-up and credit, and capital gains at a 50% inclusion rate. This annual tax drag reduces the amount that compounds.
Related savings tools
TFSA Calculator
Track contribution room and project your TFSA growth over time.
RRSP Calculator
See your RRSP tax deduction, contribution room, and projected growth.
Capital Gains Tax Calculator
Calculate tax on investment gains with the 50% inclusion rate.
Retirement Projection
Year-by-year projection of CPP, OAS, RRIF, and TFSA in retirement.
Frequently asked questions
How much TFSA contribution room do I have?
TFSA room accumulates each year starting from the year you turn 18 (or 2009, whichever is later). The annual limit is $7,000 for 2026 (unchanged from 2025), and unused room carries forward. If you've been eligible since 2009 and never contributed, your total room is $109,000 as of 2026 ($102,000 through 2025).
Is an RRSP or TFSA better for compound growth?
If your marginal tax rate is the same at contribution and withdrawal, RRSP and TFSA produce the same after-tax result. If you expect a lower rate in retirement, RRSP wins. If you expect a higher rate later, TFSA wins. In practice, TFSA withdrawals don't count as income, avoiding OAS clawback — a major advantage.
How does the RRSP tax deduction work?
RRSP contributions reduce your taxable income for the year. If you contribute $10,000 and your marginal rate is 29.32%, you save about $2,932 in tax. However, all withdrawals — contributions and growth — are taxed as income when you take them out.
What is the OAS clawback and how does it affect retirement accounts?
The OAS Recovery Tax claws back OAS benefits by 15 cents per dollar of net income above a threshold (about $93,454 in 2025). RRSP/RRIF withdrawals count as income and can trigger the clawback, while TFSA withdrawals do not count as income and have no clawback impact.
How is investment income taxed in a non-registered account?
In a non-registered (taxable) account, interest is fully taxable, eligible dividends receive a gross-up and tax credit, and only 50% of capital gains are included in income. This calculator models annual tax drag on growth and taxes only the gains at withdrawal.
What is the capital gains inclusion rate in Canada?
For individuals, 50% of a capital gain is included in taxable income (the inclusion rate). If you sell an investment for a $10,000 gain, $5,000 is added to your income and taxed at your marginal rate. Inside a TFSA or RRSP, capital gains are not taxed.
Does compound interest work the same in all account types?
The math of compounding is the same, but tax treatment changes the effective growth rate. In a TFSA or RRSP, 100% of returns compound. In a non-registered account, tax drag reduces the amount that compounds each year, leading to a lower final balance over long periods.
How much can I contribute to my RRSP?
Your RRSP deduction limit is 18% of your prior year's earned income, up to the annual maximum ($32,490 for 2025, $33,810 for 2026). Unused room carries forward. You can find your exact limit on your CRA Notice of Assessment or by logging into My CRA Account.
Sources: CRA — TFSA, CRA — RRSPs, CRA — Capital Gains