Start with $10,000, add $500 every month, and let it grow at 6 percent a year for 20 years. The annual rate is split into a monthly rate of 0.5 percent and compounded over 240 months. The opening $10,000 grows on its own to about $33,102. The stream of $500 deposits, treated as an annuity due paid at the start of each month, grows to roughly $232,176. Together the balance reaches about $265,278. You only put in $130,000 of your own money ($10,000 plus 240 payments of $500), so the remaining $135,278 is pure compound growth. Notice that the growth slightly exceeds the contributions, which is the tipping point where returns start doing more work than your deposits.
Component
Amount (CAD)
How it is calculated
The projection splits into two pieces that are added together. The lump sum uses the basic compound formula, future value equals present value times (1 plus r) to the power n, with r as the monthly rate and n as the number of months. The recurring deposits use the future-value-of-an-annuity formula, multiplied by (1 plus r) once more because contributions are assumed to land at the start of each month rather than the end. Compounding monthly rather than annually produces a slightly higher result, since each month earns interest on the prior month. The figures here are gross of tax and inflation. Inside a TFSA, RRSP, or FHSA the growth is sheltered, whereas a taxable account would owe tax on the interest, dividends, and realized gains along the way.
Frequently asked questions
Tax-free options?
Inside TFSA/RRSP/FHSA, all growth is tax-free or tax-deferred. Taxable accounts incur tax on interest, dividends, and capital gains.
How does compounding frequency affect the result?
This calculator uses monthly compounding, which means interest is calculated and added to your balance 12 times per year. More frequent compounding produces a slightly higher final value than annual compounding because each period earns interest on the previously added interest. Most Canadian savings accounts and GICs compound daily or monthly, so this calculator reflects typical Canadian account behaviour.
What is the TFSA contribution limit for 2026?
The TFSA annual contribution limit for 2026 is $7,000, unchanged from 2025. If you have never contributed to a TFSA and were 18 or older in 2009, your total cumulative room is $102,000 as of January 1, 2026. Unused room carries forward indefinitely and withdrawals made in a prior year are restored as new contribution room on January 1 of the following year.
Does this calculator account for inflation?
No, the figures shown are nominal (before inflation). To estimate real purchasing power, you can subtract the expected inflation rate from your annual return before entering it. The Bank of Canada targets 2 percent inflation, so subtracting 2 percentage points from your return gives a rough inflation-adjusted projection. Sheltering growth inside a TFSA does not protect against inflation, but it does remove the tax drag that would otherwise erode real returns further.