Please excuse my ignorance but what is the difference between spread betting and CFD shares? I thought they were the same thing?
Buying an actual stock/share in coca cola and you pay tax on earnings and you get dividens.
i thought CFD shares where a derivative version of the share but you never actually own the actual stock.
Similar, in the sense that in both cases you will not own the stock. They are both derivative products, and are leveraged. Both allow you to trade either long or short. any broker offering CFDs will likely offer a spreadbet. A CFD however is taxable. you will pay tax on any profits, the same as physically buying the shares, you pay CGT on your gains.
a spreadbet is not taxable. any profit is tax free.
the choice between ownership and spreadbet will likely come down to how long you intend to own the share for. You did say "invest" however im assuming in a forum such as "trade" 2 win there is an element to market timing in your choice...
you will pay interest overnight on the spreadbet, which is often extremely small, but will add up if you owned the share for months and months. they net each other out over the long term, spreadbet is the clear winner in the short term
i found little difference between CFD and spreadbet in terms of functionality. but swing trading, on say a weekly timeframe, rather than just holding and holding a spreadbet is a great alternative.
try it. a reputable (if there really is such a thing) broker will offer both, and the spread on the spreadbet is often negligible compared to the spread on the CFD or share these days.
dont get me wrong, im not trying to sway you. but your initial question struck me as an odd "which is better" question.
you would only use CFD if you were going to short, and if you were going to short, the chances are that will be far far shorter timeframe than holding long. Therefore there is only one winner if you are going short. spreadbet.
if you are going long, why even consider CFD, you pay tax either way. so the choice normally is which is better spreadbet or holding shares. and that typically comes down to timeframe
let me know if you have any questions, happy to help. or better yet, try them out
get a demo account with IG index and try both. then do the maths.
i have been interested in financial markets for a couple of years now but never really took the plunge.
