Many investors can still remember the high-interest-rate environment of the early 1980s — great for those with savings, terrible for borrowers. One issue of Canada Savings Bonds actually paid a staggering 19.5 per cent interest. That was a time when the Bank of Canada was busy ratcheting rates sky-high to wrestle down a serious inflation problem.

Fast forward to the present, and you'll find Canada Savings Bonds now pay 0.65 per cent. That's right — less than one per cent interest. A premium version of the bonds that limits cashability offers a whopping 1.10 per cent.

Other guaranteed products offer somewhat better payouts. A survey of five-year GIC rates from Cannex.com shows the big banks offer anywhere from 2.00 per cent to 2.35 per cent. Some smaller financial institutions, credit unions, and online outfits will pay a little more — up to 3.50 per cent in one case.

Five-year Government of Canada bonds are yielding about 2.50 per cent. No risk here, but as with GICs, not much to crow about.

The risk-free yields of five, six, or seven per cent that many were hoping for when they set up their RRSP or other savings accounts so many years ago are now a thing of the past.

The good news is that higher-yield options still abound. The bad news is that the guarantee disappears. "Yield is wonderful, but it has to be measured against the risk that you're taking," says Adrian Mastracci, CEO of KCM Wealth Management in Vancouver. And make no mistake, higher yields usually mean higher risk.

Here are some income options that will pay out more than GICs or Government of Canada bonds:

Corporate bonds

The bond universe is huge. Besides Government of Canada bonds, there are provincial bonds, global bonds, agency bonds, municipal bonds, and corporate bonds, just to name a few.

Corporate bonds tend to yield more than government bonds. There's more risk than with government bonds, of course, but bonds with investment grade ratings ("BBB" and higher) keep the risk to a minimum. "If you stick to higher grade bonds, the threat of default is not huge," says David Martin, a portfolio manager at Stonegate Private Counsel in Halifax.

High-yield bonds — known in some circles as "junk" bonds — can have yields that top 10 per cent, but there's real risk here — the reason they yield so much is because there's a bigger risk of default. Conservative investors will want to avoid these.

All bonds carry some level of risk beyond the default risk. If interest rates rise, bond prices fall. Foreign bonds also carry currency risk, unless a currency hedge is in place.

You can buy individual bonds directly from a broker. But most investors buy them through the hundreds of fixed income mutual funds or cheaper exchange-traded funds that track bond indices.

Perimeter Financial's CanadianFixedIncome.ca provides a good sampling of the fixed income marketplace and shows the current yields for a number of bond products.

Dividend-paying common shares

Hundreds of TSX-listed companies pay dividends to their shareholders. Most pay their dividends quarterly but some companies provide monthly payouts.

There's no guarantee that company management won't cut or even eliminate the dividends during a cash crunch, so advisers recommend that investors stick to large cap, high-quality companies — the "blue chips" — with a record of regularly boosting dividends. Many banks and money management companies, telcos, utilities, as well as companies that converted from income trusts pay dividends that yield close to four per cent or more. Eligible Canadian dividends also qualify for preferential tax treatment if held in taxable accounts.

Dividend-paying stocks can be bought individually, or through any of the hundreds of dividend and equity income mutual funds available to Canadian investors. A few low-fee exchange-traded funds have also sprung up to provide an easy way of accessing the market for dividend-paying companies.

Even with blue chips, there is always the risk of loss. Over the long run, however, high-quality dividend-paying companies offer the potential for further dividend increases, as well as the potential for capital appreciation.

Preferred shares

Preferred shares behave a bit like common shares and a bit like bonds. They are "preferred" in that they rank higher to common stock, so if a company runs into trouble, it will cut its common stock dividend before it cuts the dividend on its preferred shares.

Investors in non-registered, taxable accounts tend to like Canadian preferreds because the payouts get preferential tax treatment. Bond interest payments, on the other hand, are taxed just like income. A basket of preferred shares can comfortably yield five per cent. But as with bonds, rising interest rates can drive down the price of preferred shares. Preferreds can be bought directly through brokers.

REITs

Most real estate investment trusts were exempt from Ottawa's new income trust tax rules, so they were able to hang on to their income trust status. There are more than 20 Canadian REITs to choose from. Some focus on commercial office space or shopping centres, others on apartment buildings, some on health care. They distribute much of their net rental income to investors.

REITs trade on stock exchanges just like regular stocks, so they can be bought through any broker. A few TSX-listed exchange-traded funds offer exposure to a variety of REITs. Yields can be better than six per cent.

Monthly income funds

Most financial institutions offer a monthly income product of some kind. These usually contain a blend of dividend-paying stocks, preferred shares, real estate investment trusts, and various government and corporate bonds.

They spit out reasonably stable distributions on a monthly basis, which is convenient for those who want a pension-like income stream. Dozens of monthly income mutual funds are available. Fees on some products can be high, though. It's relatively easy for do-it-yourself investors to build an income stream with a few lower-cost ETFs representing a variety of income-producing assets.

Note: Stocks and ETFs mentioned in this article are for illustration only. They are not recommendations. Readers should consult their own financial advisers.