I consider myself a beginner stock market investor. Although I’ve had a 401K forever and an Etrade account for about 10 years, I don’t really feel like I know all the options when it comes to investing in stocks. That was actually my driving motivation for starting this blog – to create a platform that would make me learn more about investing and passive income with a side bonus that I could share it with you and we could learn together.
When I was approached about writing an article about spread betting, I thought it would be a good opportunity to learn more about an investment option and to share it with you as well. I must admit that I’d never heard of it prior to this opportunity. But I initially thought of it like margin or options trading.
I read a lot of articles trying to understand this investment strategy and boiled it down to this -
Spread betting on the stock market is similar to when you bet on a football game’s point spread.
The major pro is that you can invest with only a portion of the money you want to “bet”. For example you could place a bet on the price of a stock going up or down – give $100 to place the bet, but the results would be as though you had bet $1,000.
The major con is that you can lose up to that $1,000. That means you can actually lose more than you invested.
There is definitely a lot of potential for making money with this technique and the tools available, but I must admit to being a fairly conservative investor and the possibility of losing more than I have intimidates me a little.
Do any of you have experience with spread betting? If so, what are your impressions/thoughts?
**This is a sponsored post. All words and opinions are 100% mine.