Debt and savings
Compound interest
What your down payment becomes if you give it time to work.
Value after 10 years
$70,000
Of which $0 is interest — 0.0 % of the total.
- Total contributed
- $70,000
- Interest earned
- $0
See how it was calculated
- Starting amount
- $10,000
- Contributions made
- $60,000
- Interest earned
- $0
- Final value
- $70,000
Held in a TFSA or FHSA, this return escapes tax. The FHSA also gives a deduction on contribution, and the withdrawal to buy a first home stays tax-free.
Year by year
| Year | Contributed | Interest | Value |
|---|---|---|---|
| 1 | $16,000 | $0 | $16,000 |
| 2 | $22,000 | $0 | $22,000 |
| 3 | $28,000 | $0 | $28,000 |
| 4 | $34,000 | $0 | $34,000 |
| 5 | $40,000 | $0 | $40,000 |
| 6 | $46,000 | $0 | $46,000 |
| 7 | $52,000 | $0 | $52,000 |
| 8 | $58,000 | $0 | $58,000 |
| 9 | $64,000 | $0 | $64,000 |
| 10 | $70,000 | $0 | $70,000 |
These results are provided for illustration only. They apply the Canadian mortgage rules and the Quebec schedule in force, but they are not an offer of financing nor investment advice: the actual rate, amortization and terms depend on your file and on the lender chosen, and are subject to change. For a firm answer, talk to a broker.
Does that number work for you? A broker will confirm it with a real lender. In most files our compensation comes from the lender — if it were ever otherwise, your broker tells you before anything moves.
What the number does not tell you
Compound interest is only spectacular given time. Over ten years, interest stays a modest share of the total; over twenty-five, it often exceeds the contributions themselves. Compounding frequency matters less than people think: between annual and daily compounding, the gap on a 5% return is measured in tenths of a point.
For a down payment, the tax shelter matters more than the return. The FHSA gives a deduction on contribution AND a tax-free withdrawal to buy a first home — the only Canadian plan that does both; the TFSA, for its part, allows tax-free withdrawal with no condition on use. Which one to fill first depends on your file: that is a question for your advisor.