www.InvestmentGuide.co.uk
www.InvestmentGuide.co.uk Other types of direct
investment in shares
Shares - A Beginners Guide
to Making Money
How best to invest in stocks and
shares
SHARES
You take a bet on what the price of shares or a share index
will be at a specific date in the future, usually up to a maximum of six
months. The bookmaker will give you a quote for the date you choose, say, in a
month's time. You can choose to bet that the chosen share will end up either
above or below the quoted figure. If you expect it to be below, you sell
the share; if you expect it to be above you buy the share. You choose
your stake, say, £10. Then you wait anxiously for the result. At the
chosen date, you see how you have done. If you have forecast the direction of
the market correctly, you get £10 for each point the share price has
moved in the direction you bet on.
So if the price moves 80 points
down and you sold the share, you get 80 time £10 equals
£800. If you get the direction wrong and the shares rose when you sold
and they go up 100 points, you lose £10 times 100 equals
£1,000.
You can bet on 350 companies in the UK and 50 US shares
as well as around 40 stock market indices as well as 15 currencies. You can
also spread bet in options contracts but for that you need to know about
options which is complex in itself.
You can
take your profit or cut your loss before the end of the period by taking
another bet which reverses part of the original transaction. Some bookmakers
allow you to set an overall limit on your loss.
Who can invest Anyone 18 or over.
How worthwhile Potentially good value if you like to speculate. You can lose money very quickly if you predict share prices wrongly. If you are right you can double or treble your money in a short time too. Compare with Contracts for Difference and options. Spread betting needs regular attention and to deal effectively you probably need access to up to date share prices on a screen, either from Teletext or Ceefax or on the Internet although usually prices are delayed by 15-20minutes.
Minimum Before you start spread betting your bookmaker will usually expect you to send him a deposit or margin to cover some or all of your bets. The minimum per point change per bet varies. It is usually £5 or £10 for UK shares.
Maximum None.
Suitable Lump sums.
Money back When you win the bet.
Interest None.
Interest paid Not applicable.
Tax Any profits you make are exempt from capital gains tax but losses cannot be set against taxable capital gains. The bookmakers pay betting tax which is deducted and forms part of the spread.
Fees to pay Included in the spread.
Passbook You receive a note giving details of each transaction together with a statement of your loss or gain.
Children Unsuitable.
Risk High.
How to invest Get details from one of the bookmakers which specialise in this. You might consider buying and reading a book about strategies of spread betting before you start.
Where from IG Index, City Index, Financial Spreads, Cantor Index
Other types of direct investment
in shares
Shares - A Beginners Guide to Making
Money
How best to invest in stocks and
shares
Contents
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individual bookmakers don't work, please let us know so we can update them.
Last updated 12 April 2001