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Turn Your Portfolio Into A Monthly Payday

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Would you like an extra payday every month, without needing to find another job or work any additional hours? It is probably safe to say most of us would, but don’t know how that is possible. If I told you an extra monthly payday was not only possible, but it could also be tax-free and could potentially last the rest of your life, would you say that sounds too good to be true? I am happy to confirm it is both real and possible, and you are about to find out how you could potentially have your own extra payday each and every month.

Alternative Options

Unfortunately, there is no magic trick that can create money out of thin air. However, if you have investment capital, it can be used to generate high levels of recurring monthly income that in theory should last indefinitely. While investing for income (or “living off the interest”) is not a new concept, newer alternative investments have taken that concept to the next level. Annual payout yields on some of these options range from 7%-12%, compared to the 4%-6% available on traditional investments like GICs, bonds, and dividend-paying stocks. These alternative investments use a growing range of diverse strategies to generate this income, but all are designed to provide sustainable long-term monthly income.

Payday Portfolios

The most exciting part of having a “Payday Portfolio” is deciding what to spend the money on every month. The other great thing is that it is so easy to create what is essentially passive income, as you just invest your money and sit back and collect extra income every month that money is invested. Some great things this extra income can be used for include:

  • help to pay off a mortgage faster
  • cover mortgage payments on a new home or cottage
  • buy a new vehicle
  • be able to retire early
  • be able to travel more
  • help fight the rising cost of living and raising a family

The applications for extra income are almost endless, and investing money to generate that extra income is a lot easier than starting a new business or trying to launch a “side hustle”.

Tax Efficiency

If that all sounds great, how much better would it be if that extra income was tax-free? Great news, as these investments can be held within TFSAs, meaning the extra monthly income you receive can also be tax-free. For money held in non-registered accounts, income from these investments is often considered as Capital Gains, which means that only 50% of the income you receive will normally be taxable (for individuals*). Some of this income can be also be taxed as Dividends, ,which are again taxed at a much lower rate than Interest or Earned Income. In some instances, income can also be considered Return of Capital, which is not taxable at all when you receive it, but adds to Capital Gains in the future. (*proposed legislation may result in higher Capital Gains inclusion rates in certain circumstances)

Generational Wealth

Given that these portfolios are built to generate and pay out income without needing to sell or redeem any of your initial investment, it means the amount you have invested should stay relatively stable, and could possibly grow over the long term. Not only can this strategy provide income for the rest of your life, it should maintain the majority of your capital to leave behind to your next generation, which can also be used to provide them with income for as long as they hold the investments.

By now, this all may sound too good to be true. It’s not. It is real, and I am seeing more people from different walks of life harness their investments to generate what is effectively ‘”free money” every month. So, the question I initially asked should not be “would you like an extra payday every month”, it should be “how much extra monthly income can I generate for you, and what would you do with it”?

This information has been prepared by Dennis Rubeniuk who is an Investment Advisor for iA Private Wealth Inc and does not necessarily reflect the opinion of iA Private Wealth. The information contained in this newsletter comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors. The Investment Advisor can open accounts only in the provinces in which they are registered. iA Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Canadian Investment Regulatory Organization. iA Private Wealth is a trademark and business name under which iA Private Wealth Inc. operates.

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