Whether you choose to trade in stocks and shares or the exchange rates of foreign currencies there is a lot to be said about doing it yourself. In the past we have tended to leave that sort of high finance to the professionals – bond traders, currency brokers, pension fund managers and the like. But thanks to the power of digital technologies, and in keeping with the tenor of the times, people are increasingly doing it for themselves.
Where once the closest most of us would have got to share dealing would have been an insurance policy or a pension scheme, now the trend is for a more hands-on approach. The British government’s decision to allow retirees to cash in their pension pots and take the cash – rather than having to buy an annuity – is the perfect case in point. Self-reliance, self-sufficiency and DIY are increasingly the watchwords for personal finance.
Needless to say, this puts the onus on individual members of the public to take extra care with their hard-earned cash. Not everyone is equally informed when it comes to the small print of financial products and their variable levels of risk and their tax implications. It is still a highly complex area.
At the sharp end of doing it for yourself, Financial Spread Betting (FSB) – as offered by such specialists as the Tradefair organization – relies purely and simply on your assessment of a particular market at a particular point in time. It is immediately accessible, fees are minimal, and it is usually free of any tax implications. If that all sounds too good to be true, it has to be pointed out that FSB is also a highly volatile investment environment and there is no guarantee that you will not lose your money. Even so, the level of market insight and support the leading providers offer is extremely impressive. The highly polished website at Tradefair manages to make the whole process incredibly accessible and easy to get to grips with.
Thinking longer term
A safer strategy is perhaps to invest on a long-term basis. FSB is a very quick day trading mechanism which is often viewed as a recreational form of trading. There is a potential for fast profits, but there is also a significant level of risk. Putting money into stocks over a longer term is undeniably less exciting, but the trade-off is that the longer timeframe allows for a more considered reaction to events.
Outright share ownership may be more complicated in terms of the tax implications and dealing fees, but the other side of the coin is that as well as offering growth potential shares do tend to pay an annual return in the form of a dividend. The advice of a good broker may often also be of value in terms of identifying potential market movers.
An even more cautious approach would involve bucking the individualistic trend altogether, and investing in a long-term investment bond of some sort whereby your money is pooled with that of other investors in a portfolio of different stocks and shares. The benefit here is that your fortunes are not reliant on a single company or even a single national economy. Again there are fees involved, and there is no one-size-fits-all tax treatment, but on the plus side there is considerable security.
The growing onus on individuals to make their own financial investment decisions shows no sign of abating. On that basis it makes sense to at least be aware of what there is out there and what risks and potential returns each of them can bring. If you want a white knuckle ride on a daily basis, FSB might have something to offer you. If you want your financial life to be more sedate, predictable and old fashioned, other options may be more suitable. There are different ways to do DIY, and the more of them you are aware of, the better off you are likely to be.