How to Invest $500K for Monthly Income in Canada

You probably hear about TFSAs, RRSPs, and mutual funds all the time. They're important building blocks, sure. But if you have $500,000 to invest, you need strategies that go deeper.

Modern approaches that generate real monthly income. Whether you're planning for retirement in 20 years or need cash flow starting next month.

Key Takeaways

• Monthly income from $500K: Realistic range is $2,000-$5,000 depending on risk tolerance 
• Tax efficiency matters: Where you hold investments impacts your take-home by thousands 
• Mix strategies: Nobody gets rich putting all their eggs in one basket 
• Modern options beat traditional: Covered call ETFs and private mortgages often outperform basic GICs 
• Think beyond stocks and bonds: Farmland, royalties, and clean tech offer uncorrelated returns 
• Structure trumps selection: The right account types save more than picking the perfect stock

Who These Investment Strategies Are For

Whether you're sitting on $500K today or building toward that goal, these strategies apply to Canadians who want their money generating consistent income. The principles work at any scale. You just adjust the amounts.

You might be:

• Small business owners sitting on cash from a recent sale or accumulated profits
• Professionals (doctors, dentists, lawyers) with significant savings outside their practices
• Pre-retirees who've maxed out RRSPs and TFSAs and need more income options
• Consultants and contractors with irregular income looking for steady cash flow
• Real estate investors wanting to diversify beyond property
• Tech workers with equity payouts seeking passive income
• Incorporated professionals needing tax-efficient income strategies

1. Monthly Dividend REITs: Own Buildings Without Being a Landlord

Real Estate Investment Funds (REITs) may sound boring. But they are highly effective.

They collect rent from hundreds of properties. Then send you a cheque. Every month. Canadian REITs have this beautiful quirk. They pay monthly instead of quarterly like their American cousins.

CT REIT yields yields anywhere between 5-7%. Ninety-two percent of their income comes from Canadian Tire. Those long-term triple-net leases? Solid as rock. They just announced a 2.5% distribution increase in May 2025.

RioCan Real Estate? 6.14% yield. Dream Industrial REIT runs about 5.6%. They own warehouses across Canada and Europe.

So if you drop $100,000 into a diversified REIT portfolio. You're looking at $500-600 monthly. Not life-changing money. But it's real. And it shows up like clockwork.

The tax angle? Canadian REITs must distribute 100% of taxable income to unitholders. No choice. That's why the yields stay high. Inside a TFSA, that income becomes tax-free.

2. Covered Call ETFs: Options for People Who Hate Options

Fund managers buy stocks. Then they sell call options against those stocks. Someone pays them for the right to buy the stock at a higher price. That premium? It goes straight to you as extra income.

BMO's ZWC, for example, can deliver 6% and up. These aren't speculative plays. They're holding blue-chip Canadian stocks underneath.

The catch? You cap your upside. If stocks rocket up 30%, you might only capture 15%. But in sideways or slightly down markets? You're still collecting those monthly distributions.

Tax treatment makes this even sweeter. Option premiums count as capital gains in Canada. Half the tax rate of interest income.

Think about it: $100,000 at 10% yields $833 monthly. After tax in Ontario at the top bracket? You keep way more than if this was bond interest.

3. Private Mortgage Lending: Be the Bank

Banks lend at 6%. Private mortgages pay 8-12%.

The gap exists because traditional lenders move slowly. Someone needs to close on a property in two weeks? They'll pay premium rates. Small developers need bridge financing? Same story.

Private mortgage lending grew 72% from 2019 to 2021. Ontario alone has $22.4 billion in private mortgages outstanding.

Two ways in:

Mortgage Investment Corporations (MICs) pool your money with others. You own a slice of hundreds of mortgages. Monthly income flows from interest payments. Some are RRSP-eligible.

Direct lending if you're an accredited investor. Pick specific properties. Set your loan-to-value ratio. Most stick to 60-75% LTV for safety.

4. Dividend Growth Stocks: Income That Grows Itself

Fortis has raised dividends for 52 straight years. Currently 3.6% yield. But they're targeting 4-6% annual increases through 2028. Their $29 billion capital program will grow their rate base from $42 billion to $58 billion by 2030.

Enbridge? 5.8% yield. Thirty years of consecutive increases. They're spending $32 billion on natural gas infrastructure and renewable energy.

Canadian Natural Resources yields 5.3%. Twenty-five years of growth.

Start with $100,000 yielding 4.5%. That's $375 monthly today. Growing 6% annually? In ten years, you're collecting $670 monthly from the same investment. No additional capital required.

Inflation protection built right in.

5. GIC Ladders: The Boring Strategy That Works

GICs are still a viable investment in 2025, and likely will be in 2026.

One-year rates sit at 3.5-3.65% despite rate cuts. They're trading 65 basis points above the Bank of Canada policy rate.

Here's the ladder approach: Split $100,000 into five chunks. Buy GICs maturing in years one through five. When the first one matures, roll it into a new five-year GIC.

Why this works:

No guessing about rates. You're always averaging. Plus, money comes available every year if you need it. The average maturity stays around three years versus ten-plus for bond ETFs. Way less interest rate risk.

Since 2011, GIC ladders beat broad Canadian bond ETFs. With zero volatility.

6. Peer-to-Peer Lending: Cut Out the Middleman

Banks borrow your money at 1%. Lend it at 12%. 

P2P platforms let you be the lender directly.

Lending Loop handles business loans from $1,000 to $500,000. Interest rates run 4.96% to 24.93%. Balanced portfolios average 7.9% returns. Some investors report over 10%.

goPeer focuses on personal loans. They've averaged 9% annually since 2018.

The rules: You need either $75,000 income or $400,000 in assets to qualify. Maximum investment is $30,000 yearly, or $100,000 with professional advice.

Default rates run around 7.2%. So diversification matters. Spread $50,000 across dozens of loans. At 8% returns, that's $333 monthly.

Completely uncorrelated with stock markets.

7. Permanent Life Insurance

This one's counterintuitive.

Whole life insurance isn't just insurance. It's a tax shelter that generates income.

Participating policies from major insurers pay dividends. Reinvest those as paid-up additions. Cash value grows tax-free. A $2 million policy with $50,000 annual premiums might accumulate $1.5 million in cash value by retirement.

Then you borrow against it. Tax-free income. No RRSP withdrawal taxes. No OAS clawback.

For incorporated professionals? Even better. Pay premiums with after-tax corporate dollars. Death benefits create capital dividend account credits. Your beneficiaries get the money tax-free.

The insured annuity play: Buy a life annuity for guaranteed income. Add permanent insurance to preserve estate value. Higher after-tax yield than GICs. Your heirs still get the principal.

8. Alternative Assets: Farmland, Clean Tech, and Royalties

Time to think differently.

Farmland hasn't had a negative year since 1992. Average appreciation runs 7.5-9% annually. Add 3-5% lease income. Total returns hit 8-12%. Bonnefield's farmland funds delivered 8.3% over ten years. With one-third the volatility of stocks.

Clean tech is exploding. Canada's dropping $93 billion in investment tax credits over the next decade. Clean hydrogen projects get 40% refundable credits. Manufacturing gets 30%. BDC launched a $500 million fund just for climate tech.

Royalty income flows from intellectual property. Music. Films. Patents. The CPP Investment Board allocated $325 million to pharmaceutical royalties. These income streams last decades. Copyright runs life plus 50-70 years.

Zero correlation with financial markets.

At Surcon Mahoney Wealth Management, we work with business owners, professionals, and pre-retirees who want more from their wealth than standard cookie-cutter advice. We build personalized strategies that blend these income approaches based on your specific tax situation, risk tolerance, and timeline.

Whether you're a dentist managing practice profits, a business owner who just sold, or someone planning the transition to retirement income. We've been there. Multiple times. With hundreds of clients across Canada.

The consultation is straightforward. We look at your current holdings. Run the tax scenarios. Show you exactly how these strategies would work with your money. No theoretical fluff. Just real numbers based on your actual situation.

Ready to move beyond basic RRSPs and mutual funds? Let's build an income strategy that actually fits your life.

Schedule a consultation with Surcon Mahoney Wealth Management to discover how much monthly income your $500K could really generate.