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Spread Betting – How It Works and Risks Involved
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How Spread Betting Works
The Risks Involved
Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.
- Very interesting post here. It’s always fascinating to learn about new types of investing that are available to the market today.
- In reading this article, spread betting reminded me slightly of options, a tool I learned about while getting my finance undergraduate degree, in the respect that you do bet on either the upward or downward movement of the underlying security.
- However, spread betting is slightly different since the spread is involved, and not just the call and put prices of the option. Additionally, with spread betting, you don’t have the “option” of refraining from transacting your bet if the result is unfavorable, as you do with options.
- Personally, although spread betting is very interesting to learn about, I don’t believe it is well suited for my personal finances. This is because 1) it would not fit in my passive investing strategy / overall asset allocation with index mutual funds and ETFs, 2) it is slightly too risky for my tastes, being as that it is a margined product, and 3) I don’t believe I have the ability to correctly time markets, currency, and/or index price movements.
- As always, when learning about new investment strategies, make sure it aligns with your current long term plan and goals to make sure you stay on the right track.
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About the Author Jacob A Irwin
Hi folks! My name is Jacob. I am the owner and operator of My Personal Finance Journey. I started this blog in January of 2010 and have enjoyed the journey ever since. Since finishing up graduate school in Virginia in 2014, I have been working in biopharmaceutical development in Colorado. You can read more about me and this site here. Please contact me if you have any questions!
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Very interesting. Never dabbled with spread betting, and I doubt I ever will, but know I at least know what someone is talking about when they say it!
My recent post Money for College Project Weekly Roundup: Scholarship of the Day
That's about how I feel as well MoneyforCollegePro! Thanks for reading!
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I have been in investment for a while now and this is the first I have actually heard of spread betting. I dont know if its a good thing or bad thing on my part.. I guess if you are willing to take the risk the reward as usually can be great.