Canada is a highly developed market economy, and is the 10th largest country by nominal GDP. The Canadian economy is primarily dominated by the service industry; the country also has the third highest estimated value of natural resources. Due to its plethora of natural resources and relatively low population (<40 million), Canada is considered an ‘energy superpower’. Interestingly, two of Canada’s most important sectors are logging and oil; it also has a large manufacturing sector (automobiles and aircraft), and is one of the world leaders in the entertainment software industry.
There are a number of stock exchanges in Canada, with the main exchange being the Toronto Stock Exchange (TSX).
Other stock exchanges include the Canadian Securities Exchange (CSE), Montreal Exchange (MX), and NASDAQ Canada.
The S&P/TSX Composite Index is Canada’s benchmark market index, and represents ~70% of the market capitalization of the Toronto Stock Exchange (TSX).
The Toronto Stock Exchange (TSX) & TSX Venture Exchange have trading hours from 9:30AM to 4:30PM ET, Monday to Friday.
Investing in US stocks or ETFs can be an excellent way to diversify your portfolio - and if you’re based in Canada, the process is fairly straightforward! Canadians have easy access to trading securities on the two largest stock exchanges in the United States - the NYSE & NASDAQ.
Avenue 1: Open an account with a Canadian Broker
A good first step is to open an account with a Canadian brokerage service, such as Questrade or Qtrade Investor, and deposit a certain amount in Canadian Dollars (CAD). Next, convert the deposit from CAD to USD (typically through the brokerage service); you can then proceed to purchase U.S. securities with US funds. Other brokers include TD Direct Investing and CIBC Investor’s Edge.
Before depositing funds in CAD and converting them to USD, it’s critical to be aware of the currency exchange ratio at that point in time.
Avenue 2: Alternatively, you can open a trading account with a US-based broker. Interactive Brokers, Charles Schwab, and Lightspeed are well-known brokers that are supported in Canada.
Given Canada’s stable economy and reputation as a highly developed market, investing in Canada can be an attractive investment for investors.
Avenue 1: Invest through U.S. listed Canadian securities
The most straightforward way of investing in Canada is through Canadian securities (such as ETFs and ADRs) that are listed on U.S. stock exchanges. A few examples include:
Moreover, several hundred Canadian firms are listed on U.S. stock exchanges; for instance, the NYSE alone hosts ~120 companies from Canada!
Avenue 2: Buy stocks on a Canadian stock exchange
Another option is to directly purchase a security on the Canadian stock exchange - such as the Toronto Stock Exchange, Canadian Securities Exchange, and the Montreal Exchange. There are a number of online trading platforms, such as E*Trade, that support directly purchasing securities on Canadian stock exchanges - typically the TSX.