To earn compound interest, begin by investing and letting your money accumulate interest. With time, you’ll earn interest not only on your investment, but also on the interest it has earned.

For example, if you invest $1,000 at an annual interest rate of 5%, your investment will be worth $1,276.28 in five years.

Example of compound interest
Your investment1 year2 years...5 years
$1,000 X 5% =$1,050 X 5% =$1,105.50=>$1,276.28

There are many ways of benefiting from the magic of compound interest. Here are a few examples:

Few examples of many ways of benefiting from the magic of compound
Type of investmentReturn
Savings accountBetween 0.05% and 1.25%*
Guaranteed Investment Certificate (GIC) invested for 1 yearBetween 0.60% and 3.15%*
Québec or Canada government savings bonds invested for one year, redeemable at any time2.35%*

*Rates as at January 16, 2019.

The sooner and more regularly you start investing, the more you’ll benefit from the magic of compound interest.

Insight

Do the exercise!

Use the Magic of compound interest calculator

End of the insight