1. What is a “rate of return”?

A rate of return is the percentage your investments gain (or lose) over time. For example, if you invest $1,000 and it grows to $1,070 over a year, that’s a 7% return.

In real life, returns don’t arrive in a straight line. You might see strong years, weak years, and occasionally negative years.

2. Why the number you choose matters

In a calculator, the return you enter is used to project the future value of your savings. A higher number makes the future balance look larger; a lower number makes it look smaller.

Choosing a number that’s too high can create unrealistic expectations. Choosing one that’s too low can make saving feel pointless. The goal is to be reasonable, not perfect.

3. Think in ranges, not single numbers

Instead of trying to pick the one “correct” return, it helps to think in ranges:

  • Conservative: 3–4% per year
  • Moderate: 5–6% per year
  • More aggressive: 7–8% per year

These aren’t promises. They’re simply a way to test cautious, middle-of-the-road, and optimistic scenarios.

4. How to use ranges in FinForFam tools

Try running your projections at two or three different return levels rather than just one:

  • In the TFSA Planner, try a lower number (for example, 4%) and a mid-range number (for example, 6%).
  • In the RRSP Growth Starter, do the same: one cautious run and one middle-of-the-road run.

This creates a confidence band instead of a single fragile estimate.

5. Match assumptions to your comfort level

Some people prefer conservative assumptions so any upside feels like a bonus. Others are comfortable using moderate numbers, knowing returns will bounce around over time.

If a projection feels “too good to be true,” try lowering the assumed return until it feels believable.

6. Focus on what you can control

You can’t control market returns, but you can control:

  • how much you save,
  • how consistently you contribute, and
  • how long you stay invested.

Those levers often matter more than squeezing out an extra percentage point.

Quick reminder: This guide is educational only and doesn’t replace professional financial advice.

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