It’s time to summarize our passive income from July. This is our first monthly passive income report, showing cash flow from our investments, and this is what is truly important, not the size of our portfolio. We plan to live on this cash flow in our early retirement. Our income streams welcomed a new but still young stream this month—and it comes from Lending Loop.
We received 17.33 CAD in income profit before tax from lending to three companies. We have just started lending on Lending Loop, and we plan to enhance our investing there. This type of income is taxed as interest, that is, added to our annual income and taxed according to our tax brackets.
We received $543 in dividends from 11 companies. This comes to 385.21 CAD and 157.79 USD, accordingly. Most of our dividends are either in tax-free accounts or they are eligible dividends, so we are going to pay almost no tax on them.
|1||BNS||71.00 USD||Taxable account. Canadian company.|
|2||BCE||71.75 CAD||RESP account|
|3||CUF.UN||36.75 CAD||TFSA (no tax)|
|4||D.UN||25.00 CAD||TFSA (no tax)|
|5||CNQ||46.75 CAD||TFSA (no tax)|
|6||PSK||6.25 CAD||TFSA (no tax)|
|7||NRZ||86.79 USD||Taxable account. 86.79 is after 15% tax.|
|8||DRG.UN||19.48 CAD||TFSA (no tax)|
|9||TRP||52.50 CAD||TFSA (no tax)|
|10||TD||76.80 CAD||RESP (no tax)|
All profits in TFSA account are tax-free forever.
All profits in RESP account are tax-free until withdrawal. At the time of withdrawal money received from Canada Education Savings Grants and accumulated earned income (interest, dividends, and capital gains) will be taxed.
The Bank of Nova Scotia (BNS) and New Residential Investment Corp (NRZ) are in taxable US account. BNS is a Canadian company and it pays eligible dividends and therefore is taxed lower than our regular tax brackets dictate. NRZ is ineligible dividends and will be taxed higher than BNS but still lower than our regular tax brackets dictate.
We received 289 CAD in profit from renting our condo. You can read how this profit is calculated in my post “Rental Income”. Rental income is taxed without discounts, but some expenses like mortgage interest and strata management fees may be deducted from our income for tax purposes.
With regard to taxes, the best income stream comes from dividends. This year we plan to maximize our Registered Retirement Savings Plan (RRSP) contribution to lower the taxes we already pay. When we retire, we will reduce our tax brackets by not receiving income from our full-time jobs, thus paying less withdrawal money from the RRSP account.
It is amazing. We started our investing journey just about three years, ago and our total monthly income is already $851.54. Part of it is in USD, but we do not convert USD to CAD. All received money is reinvested right away, fueling future growth.
We are so happy to welcome a new income stream from Lending Loop. Any investment involves some amount of risk, and by diversifying our streams, we lower the overall risk of our investments. Now we are adding a new income source, a private mortgage, and hopefully our next monthly update will include more passive income from our new private mortgage stream.