Investing is a universal activity. As the world advances, the need to create wealth through investments also increases. In some countries, citizens save such a vast amount of their income, which prompts their governments to enact policies to encourage citizens to spend more. While in other countries, citizens spend so much until they have little to save. Stock markets enable people from all walks of life to use their spare funds to invest.
Investors often debate about whether to invest in Canadian or U.S. markets. Both Canadian and U.S. markets are considered stable and secure when compared to the rest of the world. A common stereotype propagated by some people is Canadians are a bit laid back while Americans are bolder. Some people believe the same applies to the investment habits of people in the two countries, with Canadians investing in government debentures while Americans invest in wind farms and Internet startups.
Canadian Financial Markets
The TSX Venture Exchange is a huge stock market with headquarters in Calgary and satellite offices in Vancouver, Toronto, and Montreal. The exchange offers capital access to venture companies while safeguarding investors. TSX offers Canadian Stocks for investment with about 1600 companies listed.
However, like any other stock market, The Canadian Exchange has had its share of scandals, including fraud. In the mid-90s, Bre-x rose from penny stock to 6 billion USD market cap in a few months. The company was later found guilty of insider trading. While such fraudulent activities are rare nowadays, penny stocks are still considered a considerable part of the Canadian Securities industry.
About 400 companies of the TSX exchange are part of the TSX venture composite index. The enterprises listed in the index are mostly energy and mining companies.
U.S. Financial Markets
The U.S. is considered the largest and stable securities market in the world. The liquidity of the market, which is the ability to buy and sell shares freely, offers investors plenty of stocks and securities choices. Canadian investors can access international companies within the U.S. that get most of their revenue from overseas. Many investors prefer to invest in stable and reliable companies because they have consistent dividend payouts and steady earnings.
Both the U.S and Canada are oil exporters even though the Canadian financial markets mostly populate the energy sector. Investors who want to diversify can consider investing in the U.S. stock market because it has a long list of companies from diverse industries. Canada has an array of choices when it comes to energy and mining stocks. You may consider investing in the banking and healthcare sectors because they have government backing and attractive dividends.
Traditionally the U.S. has been considered the beacon of economic freedom. The U.S. free market system is advantageous because it has an easy exchange and a competitive banking system.
Canada and the U.S. have stable stock markets with specific similarities than differences. The investing strategy in both countries relies on income and net worth. The variables that determine the size of an investor’s portfolio is determined by how much money they can set aside for investment.