Take care when spread betting

Spread betting can vary hugely. You can bet on almost anything from sports to politics and house prices. The rewards can be huge. But as with any sort of betting, there is a risk and you need to be clued up on it before you begin.

Spread betting on politics and sport is gambling. But spread betting on finance is a completely different scenario. It is a great way of making short term investments and the benefits are endless.

Financial spread betting is often less expensive that dealing through a stockbroker because brokers charge a trading commission and 0.5 per cent stamp duty is payable on share purchases. With financial spread betting however, the only charge to be made is the spread which bookmakers make between the buy and sell prices on bets.

Spread betting profits are tax free too. This is because financial spread betting is seen as gambling by the Inland Revenue, rather than as investing. So any winnings are treated the same as if they were won on a gamble.

But as with any sort of betting, there are down sides and you need to be wary in order to avoid falling into these traps. The main thing to remember is not to be careless and bet too large a size for your finances. Although the potential to make huge money is there – there is also the potential to lose huge money. So put in the practise, research thoroughly, plan and you will be halfway to being a spread betting success.