Investing has some universality to it, right? From Afghanistan to Zimbabwe, the human propensity for deferring today's consumption to build tomorrow's fortune should be largely the same. Of course, the real world is more complicated than that. In some nations, such as Japan in the 1980s, citizens saved so much of their income that the government actually encouraged them to spend more profligately. In others, like Burundi, a population employed mostly in subsistence agriculture barely has the means to save. However, what if we were to compare two similar, developed, charter members of the First World - two countries that share a language, much of the same culture and a 5,525-mile border?

SEE: What's The Difference Between Retiring In Canada And America?

Neighbors to the North
Canadians' doubtless objections notwithstanding, their nation and the United States are more similar than different. Our institutions are mostly trustworthy and secure, at least compared to most of the rest of the world, and both countries rank in the top 10 in the Heritage Foundation's 2012 Index of Economic Freedom. Does it therefore follow that individual investing is similar on either side of the 49th parallel?

The national stereotype is that Canadians are reticent, even deferential, while their southern neighbors are cocksure and bold. By extension, Canada should be a land of government debenture holders while Americans put all their money in Internet startups and wind farms. Nevertheless, that doesn't explain why Canada, and not the U.S., is home to some of the wildest and most speculative stock trading per capita in the Western world.

Penny Stocks
The TSX Venture Exchange is a venture capital market place, headquartered in Calgary with offices in Toronto, Vancouver and Montreal. This exchange belongs to the TMX group, as does the Toronto Stock Exchange, where the most senior equities are traded. The TSX Venture Exchange bills itself as the nation's "junior listings market," which is to say that almost all of the companies whose stock trades on it are longer on dreams than on solid financials. The exchange and more specifically its antecedents have hosted some notorious cases of stock fraud. The classic example is Bre-X, a gold mining concern that in the mid-90s went from penny stock to $6 billion market cap (and $287 share price) in a matter of months. The company's gold samples were fraudulent, but the insider trading was very much real. While such improprieties are rarer today, penny stocks are cumulatively a major part of the Canadian securities industry. In the U.S., such below-investment-grade issues are nowhere near as prevalent. Let's just say that the New York Stock Exchange's website doesn't contain a link where interested visitors can apply to have their stock listed.

SEE: History Of The Toronto Stock Exchange

The U.S. is traditionally regarded as the world's beacon of economic freedom, the place where pluck and resourcefulness count more than pedigree and connections. And a relatively free, lightly regulated market in consumer goods and services should make for easy exchange and a concomitant rise in per capita income - that, and a competitive banking system with plenty of market players. Whether the assumptions are true or not, the contrast in banking systems is one of the biggest economic differences between the two countries.

Assets are, to put it bluntly, concentrated in the hands of a few in Canada. A very few. Canada issues a sparse number of bank charters, meaning that the "big five" banks dominate lending and depositing. In fact, Canada's five largest banks (Royal, Toronto Dominion, Scotiabank, Canadian Imperial Bank of Commerce and Bank of Montreal) control the vast majority of Canada's domestic banking assets, roughly 85%, with only a handful of smaller alternatives. Conversely, the United States' five largest banks (Chase, Bank of America, Citi, Wells Fargo and Goldman Sachs) manage about half of the assets held in banks in America, leaving dozens of other financial institutions slicing off pieces of the market.

The practical difference? American investors have far more choice when shopping for loans. Granted, the sheer number of American banks means that bank failures are a somewhat regular occurrence, but for some consumers, that's a tradeoff for not having an oligopoly in charge of the industry. However, the counter-argument can be made for stability over options, as the World Economic Forum has cited Canada's banking system as being the soundest in the world. Two small Canadian regional banks folded in the 1980s, and they remain the only banking failures in the country in the last 88 years. "Too big to fail," indeed.

SEE: Falling Giant: A Case Study Of AIG

As for similarities, according to the Organization for Economic Cooperation and Development, which operates under the aegis of the United Nations, Canada's household savings rate is comparable to that of the U.S. - 3.3% and 4.3%, respectively, in 2012. This number puts both nations firmly in the middle of the pack among developed Western countries and reinforces the position that investors in Canada and America, whether they're in Maine or Manitoba, have largely the same objectives and wherewithal.

The Bottom Line
Among citizens of the world's richest countries - which Canada and the U.S. both qualify to be counted among in spades - differences in investing strategy are largely a function of the old standbys of net worth and income. A 30-year-old Canadian with 2.3 kids and an annual salary of $50,000 isn't going to have an investment portfolio similar to that of a 60-year-old Canadian with an empty nest and a $5 million war chest. Rather, that 30-year-old Canadian is going to have an investment portfolio similar to that of a 30-year-old American with 2.3 kids and a $50,000 annual salary. Again, when controlling for age, life station and similar variables, American and Canadian investors have more in common than not.

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