Extract

Investors are consumers. They purchase a good called a ‘security’ in a market. Although the security carries value or potential value, it is intangible. The consumer may never see evidence of the security itself, especially if he or she executes the purchase through a dealer or other intermediary. Nevertheless, this consumer has at least one purpose in mind, to turn a purchase into a profitable investment. When numerous consumers purchase and sell such securities, a capital market is born. In Canada, investing is a widespread phenomenon. Approximately 50 per cent of all working Canadians are directly or indirectly invested in the securities market (IIAC, 2007) and 55 per cent of Canadians own securities outside a retirement savings plan (such as a company-managed pension plan, RRSP or RRIF (CSA, 2012)). In the United States (US), about 49.9 per cent of all family-owned securities in 2010 are invested in similar retirements savings plans. In continental Europe, the proportion of households estimated to be investing in the stock market ranges from 15 to 20 per cent (Guiso et al, 2002). Similar proportions of stock market participation exist across other developed market economies.