According to Statistics Canada, Canada’s economy is one of the wealthiest in the world. The claim was made in 2010 when the country’s GDP came up to an impressive $1.574 trillion. Needless to say, now would be a good time for both local and international investors to invest in some Canadian stock.

Of course, investing in any country’s equity can be a mystery to investors if they are new to stocks even if they happen to be locals. Here are some of the basics of trading on the Canadian floor –

How to Invest in Canadian Stock

The country’s stocks and bonds can be purchased in a variety of ways. For example, these can be purchased directly on the –

• The TSX (Toronto Stock Exchange)
• The CNSX (Canadian National Stock Exchange)

Investors or shareholders can also purchase Canadian stocks and bonds through ADRs (American Depository Receipts) or ETFs (Exchange Traded Funds).

Toronto Stock Exchange

The TSX is the largest stock exchange in country and the seventh largest of its type in the world in terms of market capitalization. It represents a large number of Canadian businesses and strong economies such as the United States and Europe to name a few.

Canadian National Stock Exchange

The CNXS was approved as an official stock exchange by the Ontario Securities Commission 70 years ago and serves as an alternative for emerging companies and micro cap. In addition, instead of requiring investors to trade on traditional “open outcry” trading floor, the Canadian National Stock Exchange is fully automated and requires investors to create online trading accounts in order to trade.

American Depository Receipts

An ADR or American Depository Receipt represents an investor’s ownership of shares in a foreign company. Furthermore, American Depository Receipts make international companies more accessible which is why this particular resource is such an enticing prospect to investors looking to put their money on successful global prospects.

According global product manager of depository receipts at Deutsche Bank Edwin Reyes, “Depository Receipt trading reached an all time high at $1.3 trillion for the first half of 2007, up 45% year-on-year and surpassing all of 2006.”

Of course, any purchase of security should be treated with a level of caution. Investors should keep in mind that their ADR investments will be exposed to the same risks as their domestic investments. For example, in economies like Canada, the local currency is tied to the price of commodities. This means that the value of the currencies may drop if the price of commodities, like oil drops.

With a strong base in natural resources, a stable monetary policy and a low budget deficit, Canada is considered to be a haven for investors. According to Bloomberg.com, Canadian stocks rose in January 2014; a feat that sent the benchmark index to its best performance since 2010. Of course, investing in any stock exchange comes with its share of risks. However, a few lessons on how Canadian stock exchanges work, the state of the local commodities market and keeping your own personal priorities in mind might be all it takes to invest successfully.