Passive Income Required Capital
How Much Capital for Target Monthly Income
| Monthly Income |
At 4% Yield |
At 5% Yield |
At 7.5% Yield |
| $250 |
$75,000 |
$60,000 |
$40,000 |
| $500 |
$150,000 |
$120,000 |
$80,000 |
| $1,000 |
$300,000 |
$240,000 |
$160,000 |
| $2,000 |
$600,000 |
$480,000 |
$320,000 |
| $3,000 |
$900,000 |
$720,000 |
$480,000 |
| $5,000 |
$1,500,000 |
$1,200,000 |
$800,000 |
Investment-Based Passive Income
1. Dividend ETFs (Most Accessible)
| ETF |
Yield |
$100K Invested |
Annual Income |
| VDY (Canadian dividends) |
4.5% |
$100,000 |
$4,500 |
| XEI (High dividend) |
4.8% |
$100,000 |
$4,800 |
| ZWB (Covered call banks) |
7.5% |
$100,000 |
$7,500 |
| Pros |
Cons |
| Highly liquid |
Market risk |
| Tax-efficient (Canadian dividends) |
Yields fluctuate |
| Can hold in TFSA (tax-free) |
Capital can decrease |
| Low effort |
Requires large capital for significant income |
2. GIC Ladder
| Term |
Rate (est.) |
$100K Invested |
Annual Income |
| 1-year |
4.25% |
$20,000 |
$850 |
| 2-year |
4.10% |
$20,000 |
$820 |
| 3-year |
4.00% |
$20,000 |
$800 |
| 4-year |
4.00% |
$20,000 |
$800 |
| 5-year |
4.00% |
$20,000 |
$800 |
| Total |
~4.07% |
$100,000 |
$4,070 |
| Pros |
Cons |
| CDIC insured (up to $100K) |
Locked in (non-cashable) |
| Zero market risk |
Rates may drop at renewal |
| Predictable income |
Interest fully taxable (unless in TFSA) |
3. HISA (High-Interest Savings Account)
| Provider |
Rate |
$100K Invested |
Annual Income |
| EQ Bank |
4.0% |
$100,000 |
$4,000 |
| Wealthsimple Cash |
4.0% |
$100,000 |
$4,000 |
| Tangerine (promo) |
5.0%+ |
$100,000 |
$5,000+ |
Fully liquid, CDIC insured, but rates change.
4. Rental Property
| Metric |
Example (Condo) |
Example (Duplex) |
| Purchase price |
$400,000 |
$600,000 |
| Down payment (20%) |
$80,000 |
$120,000 |
| Monthly rent |
$2,200 |
$3,500 (both units) |
| Mortgage payment |
$1,800 |
$2,700 |
| Expenses (tax, insurance, maintenance) |
$600 |
$800 |
| Monthly cash flow |
-$200 |
$0 (break-even) |
| Equity buildup (mortgage paydown) |
~$700/mo |
~$1,000/mo |
| Appreciation (3%/year) |
~$12,000/year |
~$18,000/year |
| Pros |
Cons |
| Leverage (mortgage) amplifies returns |
Large capital required |
| Appreciation + equity buildup |
Not passive (tenant management) |
| Income (if cash-flow positive) |
Vacancy, maintenance, bad tenants |
| Tax deductions on expenses |
Illiquid |
Online / Business Passive Income
5. Content Website / Blog
| Investment |
Details |
| Startup cost |
$100-$500 (domain, hosting) |
| Time to revenue |
6-18 months |
| Income potential |
$500-$10,000+/month |
| Revenue sources |
Ads (Mediavine, AdSense), affiliate marketing |
| Ongoing effort |
Content creation (can outsource) |
6. YouTube / Podcast
| Investment |
Details |
| Startup cost |
$200-$2,000 (camera, mic) |
| Time to revenue |
6-24 months |
| Income potential |
$500-$20,000+/month |
| Revenue sources |
Ad revenue, sponsorships, affiliates |
| Ongoing effort |
Regular content production |
7. Digital Products
| Product Type |
Startup Cost |
Income Potential |
| Online course |
$200-$2,000 |
$500-$10,000+/month |
| E-book |
$100-$500 |
$100-$2,000/month |
| Templates/printables |
$50-$200 |
$200-$3,000/month |
| Software/app |
$2,000-$20,000 |
$500-$50,000+/month |
8. Peer-to-Peer Lending / Private Lending
| Feature |
Details |
| Returns |
6-12% (higher risk) |
| Platforms |
goPeer (Canada) |
| Minimum |
Varies |
| Risk |
Borrower default |
| Tax |
Interest income (fully taxable) |
Tax Treatment of Passive Income
| Income Type |
In TFSA |
Non-Registered |
| Canadian eligible dividends |
Tax-free |
Taxed at ~15-30% effective |
| Interest (GIC, HISA) |
Tax-free |
Fully taxable (marginal rate) |
| Capital gains |
Tax-free |
50% taxable |
| Rental income |
N/A |
Taxable (minus expenses) |
| Online business income |
N/A |
Taxable (minus expenses) |
| Foreign dividends |
Tax-free |
Fully taxable + 15% withholding |
Building Passive Income: Timeline
| Timeline |
Action |
Expected Income |
| Month 1-6 |
Max out TFSA with dividend ETFs |
$100-$300/month |
| Month 6-12 |
Build GIC ladder, continue investing |
$200-$500/month |
| Year 1-2 |
Start content website or digital product |
$0-$500/month |
| Year 2-3 |
Scale investments, grow online income |
$500-$1,500/month |
| Year 3-5 |
Consider rental property |
$1,000-$3,000+/month |
| Year 5+ |
Compound all sources |
$2,000-$5,000+/month |