- Compare UK Investments
- Where To Invest
- Trade Shares
- Trade FTSE100 Shares
- Trade FTSE250 Shares
- Trade AIM Shares
- Trade European Shares
- Trade DJ30 Shares
- Trade S&P500 Shares
- Trade Forex
- Trade Commodities
- Trade Energy Commodities
- Trade Metal Commodities
- Trade Soft Commodities
- Recommended Financial Spread Betting Books
Financial Spread Betting, CFDs and Share Dealing Overview
Confused with so many investment options? Financial Spread Betting, Contracts for Difference, Share Dealing, Savings Accounts? Not sure what they mean and if they are right for you and your investment needs? We bring you pros and cons of every vehicle and help you to find the best account on the internet. Start with our investing beginners guide.
N |
Financial Spread Betting |
Contract For Difference |
Share Dealing |
ISA and Savings |
1 |
No CGT (Capital Gains Tax). |
Income is taxed at your tax rate. |
No CGT on ISAs. |
|
2 |
No stamp duty. |
0.5% stamp duty applies (except for savings accounts). |
||
3 |
'Margined' product, only a small proportion of the total value of a position is needed. |
No leverage involved. Need to pay for a position in full. |
||
4 |
Go Short or Long. Can profit from a falling share/market price as well as a rising price. |
Can only buy shares. Unable to profit from a falling price. |
||
5 |
No Voting Rights and no influence at AGMs. |
Shareholders have voting rights and influence at AGMs. |
||
6 |
Return on Investment (ROI) is not guaranteed. |
Savings and Cash ISA accounts guarantee predefined ROI. |
||
7 |
Considered as a risky products because of high leverage. |
Medium risk investment. |
Safe haven investment. |
|
Table below compares Financial Spread Betting, Contract For Difference, Share Dealing and Savings. For simplicity we use Barclays Stockbroker and Savings Account to calculate the profit/loss if £1,000 available for investment in Barclays shares (Barclays share price is 400p). Supposedly, you think that Barclays shares will go up by 10% in one month.
Calculations |
Spread Betting |
CFD |
Share |
Savings (6%) |
Number of Shares Equivalent |
5,000 |
5,000 |
250 |
N/A |
Shares go up by 10% in 1 month, Gross Profit |
£2,000 |
£2,000 |
£100 |
£5 |
Commission to open position (buy) |
£60 |
£15 |
£12 |
N/A |
Commission to close position (sell) |
£0 |
£15 |
£12 |
N/A |
Total Commission |
£60 |
£30 |
£24 |
N/A |
Financing for one month (5% LIBOR rate) |
£108 |
£108 |
£0 |
£0 |
Tax (20% band) |
£0 |
£372 |
£15.20+£5 (Stamp Duty) |
£1 |
Net Profit |
£1,832 |
£1,489 |
£60.80 |
£4 |
Additional Information
- Financial Times - official website of Financial Times
- LSE - official website of London Stock Exchange