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, say you put $100 per month into an RRSP. That's $1,200 per year, and thanks to the first year's interest, this quickly becomes $1,243.49.
In 10 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, and you'll see how fast the amount builds up over 10, 20, 30, and 40 years.