We often tell clients that while you can’t always control investment returns, you can be tax smart in terms of how you invest. If you can add 1% after tax a year to whatever your investments happen to return, you will be much better off over time.
Very roughly, if you are in Ontario and in the tax bracket over $136,000 of income, you will lose almost half of your gains on GICs, bond interest, and U.S. stock dividends. If instead you bought a preferred share or Canadian stock that pays a dividend, you will lose about 30% to taxes. If your investment gains come from capital gains, you will lose a little less than a quarter to taxes.