I. AM. CANADIAN.
Yep! CANADIAN. How pumped are you?! I’ve been in your shoes. I am AMPED UP when I find awesome Canadian businesses. You want to know why? BECAUSE IT MATTERS. As close as we are to the USA, or even European market structure and laws, there are many differences and it can be confusing! Just now, I did a quick google search on the population of USA and Canada. The US has about 289,681,000 MORE people than us. THAT’S NUTS. It means that there are over 280 million more people potentially creating awesome content and running really cool businesses we just WISH we had here in Canada. (don’t you hate it when you find a cause you really love, or a person you want to support, but then you have to add on $15 (USD) extra worth of shipping just to get their items?! UGH LIVING IN CANADA :P)
The market is saturated with awesome things that unfortunately just aren’t 100% relevant to Canadians. In some fields, there are more transferable concepts. But when you’re talking about finance? It’s a whole different ball game. The strategies are often the same, but the account types, banks, acronyms, they’re all VERY different in the US and that can get confusing (seriously, what even is a ‘Roth IRA’. Is that a short form?! Are there other ‘IRA’s’ that aren’t Roths?!)
I thought it would be really helpful to translate some common terms I always hear around US finance so when you are reading/watching something from the US, you’ll be able to relate the same advice and strategies in a Canadian context (I haven’t run into as many European finance businesses so I’m going to stick with US for this post, but let me know in the comments below if you would be interested in that!).
Retirement
US: IRA [Individual Retirement Account]
In the US, they have the ‘IRA’. This is a type of retirement savings account. It can be opened by individuals, (different from a 401K which can only be opened by your employer). There are different options of IRA’s:
Traditional IRA - Tax deferred (you pay taxes on money when it’s withdrawn - when you retire)
Roth IRA - You’ll pay income tax on the money that goes in this account, but it can then grow tax free. (Fun fact: according to Investopedia, ‘Roth IRA’ is named for the US senator ‘William Roth’ who spearheaded the tax law governing Roth IRA’s! - Roth is a person!!)
Canada: RRSP [Registered Retirement Savings Plan]
In Canada, we have the RRSP. This is most like the Traditional IRA, in that the money is tax deferred. As long as the money stays in that account, you will not be taxed! There are advantages to this of course, you will probably be in a lower income bracket during your retirement than you were in your income-earning years, so you will potentially be taxed less than if you had counted them under your income earlier on. There are also special considerations for this account in certain provinces. In Ontario for example, you can withdraw up to $25,000 from your retirement account before you actually retire in order to help with a down payment for your first home.
Canada: TFSA [Tax Free Savings Account]
In Canada, we have the TFSA. This is a REALLY cool account. Money in here is taxed with your income when you contribute but not taxed when it comes out. (THIS INCLUDES ANYTHING YOU EARN OFF OF THIS MONEY!) You can contribute a little bit of money, let it grow, and take out the larger sum tax free!
You can open as many of these accounts as you want, but you have a $5,500 contribution limit for each year. (This starts when you’re 18 and rolls over if you don’t contribute your full amount. ex. I turned 18 in 2009 - when they made this law, so I had a $41,000 contribution limit when I opened my first TFSA in 2015).*
*If you’re wondering why the math is off they started limits at $5,000 until 2012, they also had a limit of $10,000 in 2015, now it’s back down to $5,500. Yay government. (◕‿◕)
Canada & US: Pension
This is a retirement account opened by employer on behalf of individual. In the US, it’s also colloquially called a 401K because that’s the code # of the tax law that governs it!
Banks:
When you’re choosing a bank, you want to know they have a history of trust and reliability. Usually when we think about this, it’s always the big brick and mortar banks that come to mind. (because they’re old, and our parents used them, and we trust our parents!) However, those charge INSANE fees. Internet banking has gotten extremely popular in this generation, and it’s gotten to the point that they are as reliable and trusted as traditional banks! Here’s a list of the major banks (of both types) in each country:
Major Banks in USA
Traditional - ‘Brick & Mortar’
Chase Bank - JPMorgan Chase
Bank of America
Wells Fargo
Citigroup
Goldman Sachs
Internet Only Banks
Ally Bank
EverBank
Discover Bank
Charles Schwab Bank
Major Banks in Canada
Traditional - ‘Brick & Mortar’
TD Canada Trust [TD]
Bank of Montreal [BMO]
Canadian Imperial Bank of Commerce [CIBC]
Royal Bank of Canada [RBC]
Bank of Nova Scotia [Scotiabank]
Internet Banks
Tangerine {I recommend this one! *Use my Orange Key for a free $50 - 51165440S1}
Simplii Financial (previously PC Financial)
EQ Bank
ICICI Bank
Robo Investors:
Robo investors are all the rage these days. Who knows whether these are ‘Canadian born & raised’ advisors, but here are the major robo-advisor platforms you can use in Canada:
Wealthsimple {This is the one I use! You can get $10,000 managed free with this link*}
Just Wealth
Wealthbar
Nest Wealth
Modern Advisor
Apps/Digital Awesome:
US: Acorn
This is a pretty cool little app that invests your spare change. You connect it to your account and it rounds up your credit-debit purchases to the nearest dollar and invests that money for you! I was pretty intrigued until I found out it didn’t offer anything for Canadians. But then I found Mylo!
Canada: Mylo
This is basically Acorns for Canadians. It’s so far pretty cool, I got it maybe 2 months ago and it’s invested $43.57 for me. I haven’t earned that much off of it, but I think I’ll keep it going. At least for a while! (That’s almost $50 so far that would’ve just been sitting in my account doing nothing so, sounds good to me!) [*Click Here for a free $5!]
Credit Scores
These companies check your credit without tipping off those `hard check` meters that actually lower your score (did you know checking your score actually lowers your credit? How ridiculous is that!?) Use one of these below to check your score for free:
US: CreditKarma
Canada: Borrowell*
{Ok, so you can use both of these credit-checking websites in Canada. But I know that Borrowell is based in Toronto so support Canadian businesses!}
Phew! I know, that was a lot of information. Kudos to you for reading this far! Comment ‘Canadians Love Money’ if you read all the way through? (◕‿◕)
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