Generating Investment Income: A Practical Guide for Every Investor
- David LeBlanc
- 1 day ago
- 12 min read
Hi again real money believer,
First off, to all of my Canadian readers and listeners I wish you and your family a very Happy Thanksgiving 🦃🍂. I am super thankful and grateful for you as we walk and grow together on shared paths of creating more financial independence, choice and freedom in our lives.
When most people think about growing wealth, they often picture equity-oriented ETFs or individual stocks to hope and pray they get the gains for which they are wishing or needing. But another important part of building wealth in my opinion is also generating regular and consistent income from your investments. You may not need the extra income today however income investing gives you cash flow, supports your lifestyle, can help with unexpected expenses, and can even create a legacy for future generations.
Too often, I see many people default to what feels safe — this usually means using high-interest savings accounts, Guaranteed Investment Certificates (GICs), and bonds. In today’s environment, these “safe” investments can actually work against you. Low yields, taxes, and inflation often mean your money might be actually losing purchasing power even while you believe it's “safe.”
Part of the challenge is how we’ve been conditioned and programmed by the investment industry to think about money. Many of us aren't taught about how to properly manage our finances and investing (we get "schooled" by watching our parents) and we often lack the knowledge and confidence to do it ourselves.Many of us have been taught to treat money, finances and investing with fear as it's too complicated and/or risk or losing it — so that we had them over to institutions, banks, or advisors and let them hold it in GICs, bonds, balanced funds, or savings accounts as conservative, "safe" places,. On the surface, it feels responsible and cautious and that we are doing the right thing. Emotionally, it gives comfort — the sense that your money is “safe.”
In reality, this fear-based investing can often work against us.We suffer from low returns, inflation, taxes, and locked-in capital means our money is often working harder for institutions than for us. We give away control in the name of safety, and in doing so, we may be missing opportunities to grow and protect wealth more effectively and which actually meets our goals.
Let's look at some of the most popular financial / investment products which can generate income.
High-Interest Savings Accounts (HISAs)
These have now been around for a long time and offer higher interest than a regular saving account. They feel safe — your money sits in a bank account earning interest. Emotionally, there’s a sense of security knowing your cash is accessible. But that comfort can be misleading. Inflation is likely higher than the interest you’re earning, plus outside a TFSA or RRSP, the interest paid is taxed in Canada at 50%.
👉 I found EQ Bank which has a HISA paying 3.5% interest. Let's say I deposit $1,000. When I factor in inflation (let's assume 3% but in reality we all know it's higher), and 50% tax owed on the interest, I am worse off. After a year, my $1,000 is now worth $988.33. When do the math, it doesn't add up to my favour
Your purchasing power quietly erodes even as you think you’re being cautious. I think HISA's are mostly marketing tools by banks and other financial institutions as they typically offer higher promo rates to lure people in then revert back to average. They use our deposits to either lend out as mortgages or loans, etc. and/or to get us into their other products.
There’s another, often overlooked risk: having a big balance in a HISA can make impulse spending much easier. With cash so accessible and maybe a big account balance — the tap of a card or a click online — it’s tempting to dip into your “safe” money for things you don’t really need.
📣 My opinion: HISAs may have a role for short-term savings, but your emergency fund doesn’t have to sit in cash. Precious metals, particularly gold, can act as a more effective emergency reserve. Gold is liquid, globally recognized, and preserves purchasing power even in times of financial stress. Emotionally, knowing part of your emergency fund is in gold can also provide confidence and peace of mind beyond the numbers. Plus, there's no counterparty risk, worry of a bank bail-in or being de-banked, or not having access to your online bank if the power or Internet goes down.
Guaranteed Investment Certificates (GICs)
OK, this may the ONE I dislike the most. Oddly enough, GICs were my introduction to investing way back when I was a teen in the late 1980s/early 1990s. Back then, interest rates were stupic crazy at over 20% at one point and my father would purchase GICs which earned a very high interest rate and he would have me tag along to the investment office.
GICs are often marketed as “risk-free” investments as they guarantee you the interest when the GIC expires. You lock your money in for a term (such as 1 - 5 years), and it earns a fixed interest rate, currently around 3.7%–3.95%. Why do I dislike GICs? No one ever got rich investing in GICs and, similar to HISAs, your money suffers from high taxation (taxed at 50% interest income), low yields, inflation, plus is locked away for the entire term. You would have been better off doing nothing as leaving your cash under the mattress (still not a good idea but better than a GIC!).
👉 I found a 3-year GIC with Meridian Credit Union which is paying 3.5% today. If I invested $1,000, after three years, it would be worth $965 after taxes and inflation. So again, how is this a safe and conservative investment decision?
In talking with numerous of my clients and others, I find that too many only look at the rate in front of them, such as 3.5% in a HISA or GIC and accept that, but fail to consider the outcome that their money is often worth less at the end which changes their outlook on what's safe and right for them.
📣 My opinion: Think hard if this truly is safe for you by locking your money away for a set period while the world changes along the way. GICs only make sense for ultra-conservative, short-term savings but even then I myself prefer owning gold as it protects against inflation, has zero counterparty risk, and offers growth potential, plus no taxes where applicable. GICs provide almost no growth (in fact negative growth when taxed), little income, and minimal flexibility as your money is tied up for the term period. The comfort of “safety” is often outweighed by the financial and opportunity cost.
Bonds and Bond Funds
What is a bond investment? It's essentially a loan you make to a government or corporation often so they can operate or grow - it's a way for them to raise money and, in return, they pay you interest.
When you buy a bond, it is for a set period of time (called the term or maturity). In return, they promise to pay you regular interest (called the coupon rate) and return your original investment when the bond matures.
For example, if you buy a $1,000 bond paying 5% interest for 10 years, you’ll receive $50 each year in interest, and at the end of the 10 years, you get your $1,000 back. When held outside of a registered account such as TFSA or RRSP, the interest is taxed at 50%.
A bond fund is an investment fund (either a mutual fund or an ETF) that pools money from many investors to buy a diversified portfolio of bonds. Instead of buying a single bond yourself, the fund invests in many different bonds, which can include government bonds, corporate bonds, and sometimes high-yield or international bonds with various maturity dates to take advantage of changing interest rates.
Bonds, and bond funds, are often viewed (or sold to us) as lower-risk investments compared to equities because you get fixed income and repayment at maturity, similar to a GIC. However, they aren’t risk-free as while your money is held in the bond interest rates could rise, bond prices fall; and when inflation is high, your real return can turn negative, meaning your purchasing power shrinks even if you’re earning interest. These are much of the conditions we are under now.
👉 Let's buy $1,000 of the classic Government of Canada 3-year bond which is yielding 2.5% these days - it is often seen as very "safe" as it's backed by the government. After the bond matures in 3 years, the real value of my initial $1,000 would be worth $950 due to taxes and inflation.
📣 My opinion: Bonds are often seen as the “safe” part of a balanced and diversified portfolio. The investment industry would have us believe that a well-built portfolio should have a fixed income component be it a mix of 60% equities / 40% bonds, or 50/50, etc often based on age and risk tolerance. This "cookie cutter", "one size fits all" approach and brainwashing only helps to sell their products and have people paying ongoing transaction fees to their benefit and not yours. The only time I would consider owning any bonds is when interest rates have reached their peak and are coming down as this would increase the value of my bond as it is paying a higher fixed interest rate, but even then I still probably wouldn't own any...like ever.
Dividend Stocks
Dividend stocks are shares of companies that pay a portion of profits to shareholders, usually quarterly or monthly. A dividend is simply a payment from a company to its shareholders.
They can provide some growth and income, but yields are often still relatively low — typically between 2%–8% — as the company often reserves a portion of these profits to help grow the company which may help to raise its dividend over time. Why do companies pay a dividend in the first place? It's a way to attract investment into their company by rewarding investors to stay for the long-term with a regular dividend. Those companies which pay dividends are typically large, well-established companies which generate large cash flows and profits which can afford to pay out a portion in dividends. Think of banks, utilities (e.g. Hydro One), telecommunications (e.g. Telus), railroads (CN), pipelines (Enbridge), etc.
However, these lower yields can still struggle to keep up with inflation and taxes if held outside of a TFSA or RRSP therefore you may need a significant amount of money to generate any meaningful income. Also, picking individual companies can be difficult, stressful, and one bad quarter or management change could impact the stock price and/or dividend payments...remember TD Bank???
How do you get paid? When you buy a stock which pays a dividend, you own shares in that company. The company will declare its dividend amount and then you simply multiple the number of shares you own by the dividend payment. Let's use Royal Bank of Canada (RBC.TO) as an example. If you invested $1,000 today at its current price of $201.20, you would own five shares. Its quarterly dividend is $1.54 per share, therefore you would receive $7.70.
Dividend income is taxed much more favourably than interest income, often 1/3 or 1/2 less than interest income depending on your province. Of course, if held in TFSA it is tax-free (best option!), and tax-deferred inside a RRSP (not a good option if you're at a high marginal tax rate).
👉 Let's buy $1,000 of RBC stock in a non-registered account and hold it for three years while earning the dividend. At the end of this period, I wouild have received $78.03 in dividend income however my real value would be $986.50 after taxes and inflation. This is still better than a HISA, GIC or bond, but is it still a "safe" investment?
Emotionally, relying on dividend stocks alone can feel uncertain and stressful — watching markets swing, worrying about dividend cuts, and questioning if you picked the right companies.
📣 My opinion: Dividend stocks can play a role in generating income at a lower tax rate when inside a TFSA or non-registered account, but you often need a large amount of money upfront to achieve a significant income given their low yields. Owning individual stocks takes more work and knowledge to research and choose which ones are right for you, and I think owning individual stocks can be risky should something happen to the company or its sector (e.g. world events or shocks) which negatively impacts the stock price and/or dividend payments.
High-Yield Income ETFs
We've reach my all-time favourite source of income. For me, its better and way easier than any job, side hustle, owning a laundromat...maybe the only better source is owning a casino! High-yield income ETFs are my ultimate favourite way to generate income. What is an ETF and income ETF specifically?
ETF = A fund that trades like a stock and holds many investments, giving you instant diversification in one purchase.
High-yield income ETF = An ETF that pays above-average, regular income by investing in high-dividend stocks, bonds, or using strategies like covered calls, while spreading risk across many assets.
These funds focus on creating income primarily over growth by producing higher distributions, often using strategies like covered calls and other income producing strategies by the fund manager. What is a distribution? It's a payment from the fund to investors, which can include dividends, interest, or return of capital.
ETFs are funds that often hold a basket of assets and trade like stocks on an exchange like the Toronto Stock Market, S&P 500, New York Stock Market, etc. This can give you diversification, professional management, and liquidity in one investment. Unlike mutual funds, which are priced once per day and may have minimum investments, ETFs trade throughout the day and usually have lower fees.
Why I love them? They often produce much higher yields often anywhere between 10% to 20% and even more which can be very meaningful even with a smaller portfolio. They’re diversified, professionally managed, flexible, and because they generate higher levels of income compared to all the others I've mentioned abnove,they have a very good chance of outpacing inflation. Plus, you don’t have to pick individual stocks or bonds, and you can reinvest distributions to compound growth. Here’s a concrete example:
👉 Let's buy $1,000 of BANK from Evolve ETFs (based in Toronto) in a non-registered account and hold it for three years while earning its distribution of 18% anually, paid monthly. At the end of the three years, it would be worth $1,563 and when inflation and taxes are considered it would be worth $1,431. Plus, if the price of BANK went up in value, it would be worth even more.
Let's open the hood a little on BANK. It holds all of the major Canadian banks and life insurances companies which means I get instant diversification with one purchase, plus it pays me a distribution every month giving me regular and consistent cash flow. I could use this monthly income to reinvest into more units (my preferred approach) to snowball my income, withdraw some or all for a planned or unplanned expense in a given month, or even use some to buy some precious metals...I have options and that's what I love.
📣 My opinion: High-yield income ETFs provide easy and instant diversification with the potential for much higher income and on a regular basis. Buying them is simple inside a DIY online brokerage account such as Wealthsimple or Questrade, and seeing those distributions hit my account each month gives me the comfort and satisfaction knowing I am finally making real (after-tax and inflation) progress in meeting my goals, plus gives me more options with income and growth. I don't need a ton of money to get started, in fact even $20 is enough to begin, and when I reinvest I see my income increase each month and snowball year to year. My anxiety has gone way down and I am not buying and selling like I was with growth investing and that's feels good. It's one of those things that I wish I had known when I was my 20s - I wish my father exposed me to these and not GICs! - and why don't more people invest this way?
Try this online dividend calculator to use it to project future account and dividend/distibutions? When you choose the right high-yield income ETFs right fot you, reinvest into more units, and even contribute an amount (small or large) monthly, over time the figures can be life-changing and create your own personal pension plan and generational wealth.
Taking Control and Facing Fear
Many of us have been conditioned to treat money and investing with fear. We’re taught that the “safe” way is to "put it in the bank" or hand it over to someone else and let them manage it for us. Emotionally, this feels cautious, responsible, and comforting. In reality, this fear-driven approach decreases the value of our money which rarely creates wealth. GICs, bonds, and savings accounts may feel secure, but they won’t make you rich. Low yields, inflation, taxes, and opportunity costs mean that your money often works harder for institutions than for you.
By taking control — through high-yield income ETFs, diversified dividend strategies, and precious metals — you too can generate regular meaningful income, protect your purchasing power, and feel confident that your money is working for you, and not just being stored in a "safe" investment or being used by instiutions as low interest loans for their benefit
The Big Picture
Think of creating your own high-yield investment stream as the engine of your portfolio, keeping money working for you, while precious metals act as the anchor, preserving wealth and shielding you from financial turbulence.
Fear has conditioned many of us to choose “safety” over opportunity. But in today’s environment, real security comes from understanding your investments, diversifying, and taking control — not just handing your money over to someone else.
Remember: no one ever got rich relying on GICs and bonds alone. True wealth comes from re-gaining control of your finances by learning and building confidence, taking calculated decisions that put you on the path of your goals, choosing investments wisely and that give you peace and security, and letting your money work harder for you. You deserve it.
Leave a comment and/or send me a question as I always reply to them.
To your financial health 🥂,
David LeBlanc
The Precious Metals Coach + Money Mindset Mentor
"Real Money For We The People"
🗓️ Curious? Want to discuss more? Book your free 15 minute "Discovery Call" to get real answers to some of your most burning questions about whether precious metals and/or creating your own income stream may be right for you. Never any pressure or obligation, only my honest and unbiased insights and opinions. It's that simple.
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