Income Investing 101: What is Income Investing?

by | Jan 28, 2026

By Caroline Grimont

Over the holiday season, I had the opportunity to meet dozens of my friends and family. While we caught up on our lives and notable events of 2025, one theme that kept coming up was winning the lottery. Well, that conversation was spurred by the fact that one of our holiday traditions is playing scratch cards, so that was not completely unexpected. What did surprise me was what a vast majority of my loved ones wanted to do with their fantasy winnings – retire. This was surprising, because many of those who played were in their 20s and 30s. Why did people want to leave their careers behind?

Curious about this, I dug a bit more into the ideas and motivations behind what was behind this urge to retire and quickly found out that it was less leaving the workforce, and more gaining opportunities that constituted what many considered “retirement.” For example, one younger member wanted to travel more. A slightly older one wanted to spend more time with his wife, as they were expecting their first child. Others were anxious about the impacts of artifcial intelligence, both on their jobs and their portfolios.

To all with whom I discussed this, I asked a follow up question – do you want to leave your job itself, or do you want to replace your pay cheque with a steady income? All preferred the latter. So why not use an income strategy to invest, I asked, and with many, I was met with a blank stare. Not a Gen Z stare, but genuine befuddlement.

So, I thought today we’d discuss a few basic questions – what is income investing? How does it work? Who should consider it? And how to invest?

What is Income Investing? Why Do Investors Use This Strategy?

First up, what is income investing? As the name suggests, it is investing for income. That means, if you want to get a steady stream of income, you invest in securities that provide it, either in the form of interest, or rent, or dividends. All you need to do to start this strategy is to add investments to your portfolio that provide income. It’s really that simple. But it isn’t easy, as how you invest would depend on multiple factors, including your risk appetite, budget, financial plan, and others.

For many people, income investing offers a passive source of income that replaces their bi-weekly paycheques, so in an ideal world, for them, the income should be paid out in somewhat regular intervals. For example, if you had a rental property in which your tenants paid the rent on the 5th of every month, you’d have some certainty of getting that income on that day. Similarly, if you bought a GIC that paid out annually, you’d get a specific amount in interest on a specific day. By combining many of these streams, you can somewhat gauge what your annual income might be from investments. This can help you plan, not just in retirement, but also for your working life.

Which Investments Provide Income? How to Invest?

As you can probably tell, you can use multiple kinds of investments to generate income. These include bonds, GICs, rental income from either property itself or real estate investment trusts, dividend-paying stocks, equity mutual funds and exchange traded funds that are focused on income, covered calls, and many more.

Because of the wide cornucopia of options on offer, what you buy will depend on you. For example, I’d love to buy about 8 investment properties in Toronto, but that will cost many millions of dollars, which I do not have. That means I’ll have to work my budget to figure out what I can afford. Once I know what I can afford, I’ll have to figure out what my risk tolerance and rick appetite are – sure, I might THINK I can withstand a 60% drop in my portfolio, but can I really? After I know how much risk I can stomach, then I need to factor in my financial goals. Importantly, I also need to keep an eye on my time horizon. If I need my money in 6 months for a trip somewhere, it doesn’t make sense to put it all into stocks, as a stock could rise or fall, and there is no guarantee of where the stock will be in 6 months when I need my money. But if I need the money for retirement in 15 years, then yes, I could invest in income-generating stocks.

In general, before I consider any income investment, I ask myself these questions (you can find a version of this from the Financial Consumer Agency of Canada here):

  1. What is the investment? Do I understand it, and could I explain it to my mum?
  2. How risky is it? In the worst-case scenario, how much could I lose? Am I OK with that?
  3. When can I take my money out? Are there any barriers?
  4. What are the fees and costs associated with buying this product?
  5. How much income will I get? Is it guaranteed?

Equity and Income Investing

If you spend any time on do-it-yourself investing sites, you will quickly come across recommendations for stocks, or funds, that generate income. Here are some ways in which investors generate income through equities:

  • Dividend-paying stocks: Many Canadian retirees love these stocks, as they pay out regular dividends, usually on a quarterly basis. Many Canadian blue-chip stocks pay out dividends, including banks, telecom companies, utilities, and energy firms.  
  • Income funds: Many mutual funds, and exchange traded funds, have specific mandates to provide income.
  • Covered Call ETFs: Covered Call ETFs aim to generate income for investors through owning a portfolio of stocks and then buying call options on those stocks and collecting the option premiums which are paid out to investors as income. Harvest ETFs has a wide range of covered all ETFs for investors of all stripes. You can find out more about covered calls here.

Why Harvest Portfolios for Covered Call ETFs

At Harvest Portfolios, with our comprehensive suite of ETF offerings and multiply articles focused on  investor education, we are providing tools that could help you on your  financial journey.

Over the years   over $2 Billion in total ETF distributions since inception across all out funds. We have equity portfolios that focus on established businesses, leading themes, and secular trends across sectors, combined with an active covered call strategy to provide a dual approach of generating high monthly income and long-term capital growth. Whether you prefer Canadian single stocks, or US, balanced asset allocation funds, or diversified income ones, there’s something for everyone! Come take a look at our product line up!

Disclaimer:

The information is meant to provide general information for educational purposes. Any security mentioned herein is for illustration purposes and should not be taken as an invitation to purchase or sell such security. Commissions, management fees and expenses all may be associated with investing in Harvest Exchange Traded Funds managed by Harvest Portfolios Group Inc. (the “Funds”). Please read the relevant prospectus before investing. The Funds are not guaranteed, their values change frequently, and past performance may not be repeated. Distributions are paid to you in cash unless you request, pursuant to your participation in a distribution reinvestment plan, that they be reinvested into available Class units of the Fund you own. If a Fund earns less than the amounts distributed, the difference is a return of capital.

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