When considering spread betting as an investment option, you will want to make sure you know the advantages and disadvantages of it, especially when compared to traditional investment opportunities. Understanding how this type of betting will impact your overall financial portfolio will help you to determine whether or not it is a good move, and if so, how much you should be investing in this area.
Benefits of Spread Betting over Traditional Trading
There are many advantages that you can get from spread betting, which simply aren’t there when buying stocks or indexes. Review the following advantages and see which ones will apply to you:
- No Stamp Duty – If there are stamp duties in your country, this type of investment is exempt from them.
- No Capital Gains Taxes – In most countries, financial spread betting does not get hit with capital gains taxes, which can help to save you a significant amount of money on your gains.
- Faster Returns – While not always, most traditional investments have a much longer term approach. Financial spread betting typically only goes for a couple of weeks.
- Long and Short – You typically only make money with traditional investing when the asset you purchase goes up. With spread betting, you can make money as it goes up and as it comes down, giving you more flexibility.
Benefits of Traditional Investments
Of course, there are also some benefits of traditional investments too. Understanding what they are, and how they compare with spread betting is very important to learn:
- Reduced Risk – When you buy a stock or other asset, you can’t lose more than your initial purchase amount. With spread betting, however, you can lose more if you don’t close the bet out.
- Physical Ownership – You never actually own a piece of a company or other asset when you are spread betting. With traditional investing, you actually own part of the company you are investing in.
- Buy and Forget – You don’t need to pay as close attention to a long term investment as you do with this type of betting. While you don’t want to ‘forget’ about a traditional investment, you don’t need to watch it nearly as closely.
The bottom line is that both options have advantages and disadvantages. Financial spread betting is not right for everyone, but for many people it can be an important part of their overall financial investing portfolio. Take some time to learn about it, and consider whether or not it is the right option for you.