If you’re unfamiliar with spread betting, this is a revolutionary investment vehicle that enables individuals to make money from price movements in thousands of markets. Its main advantage is that it allows you to trade various assets without ever owning the underlying asset, which in turn makes it possible to profit in a depreciating marketplace.
This has made the financial markets accessible to novice and inexperienced investors, from individuals who are looking to earn additional income to business-owners who want to raise capital.
Is spread betting really a viable investment vehicle for entrepreneurs though? Let’s take a look by considering the following:
The Nature of Spread Betting – Does this Suit Business-owners?
In simple terms, spread betting offers investors or financial market traders the opportunity to speculate against the performance of a specific asset class. So rather than simply buying and selling assets and being bound by their real-time value, spread betting ensures that it’s possible to hedge against stocks, shares and currencies and profit from market conditions.
Not only does this make it easier to optimise profitability over any given period, but it also simplifies the investment proposition. If we take currency, for example, investors can use their knowledge of the macroeconomic and geopolitical climate to place a simple wager on the future trajectory of a specific pairing. This negates the more complicated aspects of investment in the modern age, as traders are simply required to apply knowledge and decide whether to pursue short or long-term returns.
More specifically, they must decide whether to back an emerging or growth currency over time or leverage the market’s volatility by hedging against a depreciating pairing.
From an entrepreneurial perspective, however, spread betting may not be the most appealing investment vehicle. After all, the type of liquid and derivative markets typically targeted by spread betting tend to boast high levels of volatility, which in turn creates risk that could place company capital at risk. While this risk is partially negated by the simple and agile nature of spread betting, it’s fair to say that rapid price movements and the lack of a tangible store of wealth may deter some individuals from investing.
The last word
If you’re an entrepreneur who want to invest your personal wealth into the financial markets (before sinking the profits into your venture), spread betting is a far more viable option. Remember, this type of vehicle allows you to execute multiple trades within a short space of time, realising quick profits that build wealth efficiently.
You may also be inclined to take more significant risks with your own capital, particularly if your business remains in the start-up stage.