Life in Canada
Canadian Finances Guide: What You Must Know as a Newcomer
According to the Global Economic Forum report 2019, Canada is one of the safest countries in the world. Canada has secured 9th rank globally for its robust financial status in the world. As a Canadian newcomer, it is very important to understand the financial position of the country before you move in. Here, in this article, we will shed some light on the Canadian financial system to help you as a newcomer in the country.
Types of Financial Institutions in Canada
The Canadian financial institutions are broadly divided into the three categories:
1) Banking
These are financial institutions where you can deposit, withdraw and borrow money. For instance, banks, online-only banks, credit unions, trust companies, mortgage companies, etc.
Banks: A bank is a licensed place to receive money and make loans. Most banks are managed by the national government. The five largest banks in Canada are often referred to as the “big five” in Canada.
Digital-only banks: Additionally, to banks, there are a few Canadian digital-only banks that provide all services digitally and do not have any physical branches.
Credit unions: A credit union is a smaller financial institution that is owned by its members, who also typically account holders. They manage and operate under provincial legislation and regulations and provide similar services as banks.
Trust companies: Trust companies are legal entities same as banks that act as an agent for the purpose of administration, management, and the eventual transfer of assets to a party.
Mortgage companies: Money lending entities such as mortgage finance companies and mortgage investment corporations offer real estate financing.
2) Insurance Companies
Insurance companies are the financial entities that cover all the risk of loss in numerous situations, caused due to varied factors. This includes homeowners or renter’s insurance, health insurance, car insurance, life insurance, and to name a few. They reimburse you for any loss that’s covered by your insurance policy. Once you purchase a specific type of insurance, one is required to make periodic payments, called premiums, to the insurance company to avail of the agreed-upon coverage.
3) Investment Companies
These are the organizations that emphasize investing, administering, or managing funds or money on behalf of others. For instance, such companies are investment banks, hedge funds, underwriters, and brokerage firms.
