Cheapest way to invest in stock market indices and individual commodities?

A

auburn

Registered User
Messages
27
Hi,

Just wondering if any experienced investors out there in the investment community can tell me the best way (most cost effective and tax efficient) to invest in stock market indices and individual commodities?

For example, let's say I wanted to invest in: corn, gold, S&P 500 index, and FTSE 100.....etc.....

Many thanks for your help.

Auburn
 
There are many many threads on these topics. Do a search in the Saving & Investing and Financial Best Buys sections.
 
futures.tradingcharts.com is great web site, shows performance of commodities, corn, gold, soybeans in chart format, so you can see how they are performing on a daily basis. Read Mark Shipmans book, its knowing when to buy, but more importantly, knowing when to close your position, by following a charts trend, and keeping an eye on the moving average. Its all very well in theory, I've yet to apply it, no point investing a dime, if you cant afford to lose it.
 
Thanks very much.

In relation to Mark Shipman's book, he points out the advantage in spread betting to take a position in commodities - namely that UK residents don't pay any tax on gains.

Do Irish residents enjoy the same tax advantages...?
 
I don't think you should worry about tax issues when investing in these instruments. Gains are hard to come by and only when you've already had a successful strategy should you concerned about paying taxes for them. This is not the same as putting money in the money and earn base interest rates. Most who start thinking about tax advantages and disadvantages will never have to pay taxes on them, in fact, they start deducting the losses from them.
 
howdydoo said:
I don't think you should worry about tax issues when investing in these instruments. Gains are hard to come by and only when you've already had a successful strategy should you concerned about paying taxes for them.
Click to expand...

Huh?

Why work out a strategy in such a way as to incur a tax liability if it is successful when the means to legally avoid tax on gains via spreadbetting exists? What benefit is there is doing so?

In fact, for some of the commodities mentioned in this thread, spreadbetting provides probably the easiest way for small investors to take a position on them, leaving aside the tax issues.

To answer your question Auburn, yes, gains on spread bets are tax-free for Irish taxpayers. Shipman is very positive about spread betting because of the tax advantages, unfortunately his book is very sketchy on the practicalities. In particular, he is entirely silent on the question of where to set stops, although you can't place a spread bet without setting a stop. He also says nothing at all about shorting, even though spread betting is one of the easiest ways for private investors to short markets. His book is all about following price trends and I would have thought the methods he describes should in priniciple work equally well in rising and falling markets, provided there is a clear trend.

Search some of the earlier threads Auburn, for more detail on spread betting.
 
Sorry I wasn't clear enough on the word strategy. I meant strategy as a method to invest or trade the markets. I wanted to say that you have to have a winning strategy to make money before considering tax liabilities. Tax is an after-thought once you win consistently because there is a high percentage of people invest and end up losing their money so no tax considerations except to have the accountant write them off as deductions. Just don't count the chickens before they're hatched. Finding a successful strategies takes many months if not years.
 
auburn said:
Thanks very much.

In relation to Mark Shipman's book, he points out the advantage in spread betting to take a position in commodities - namely that UK residents don't pay any tax on gains.

Do Irish residents enjoy the same tax advantages...?
Click to expand...

It's the same for Irish residents. He also STRONGLY warned against this type of investment if you're new to the game. Be very carefull..
 
giannip said:
It's the same for Irish residents. He also STRONGLY warned against this type of investment if you're new to the game. Be very carefull.
Click to expand...

This is not strictly true - in fact the opposite is the case. Shipman strongly advises that all commodities investments by UK residents be made as spread bets. The reason for his advice is the tax-free status of gains, which applies equally to Irish residents.

What he does warn strongly against, and rightly so, is taking a highly leveraged position using spreadbetting. This is very easy to do and also a good way to lose your shirt.
 
I know I have to read up about spread betting but dont these bets expire pretty quickly hence its gambling as distinct from investing ? And the original poster did ask for the cheapest way to 'invest'. My intention isnt to be pedantic. Compare this to buy and hold .
At least if my bet on the markets goes wrong when choosing to buy a share, the company can always turn itself around. However if I make a spreadbet on that share and it expires in a month or the bet fails then what am I left with ? I've lost my capital with no chance of regaining it.
Is my understanding of spread betting as outlined above correct ?
 
sign said:
I know I have to read up about spread betting but dont these bets expire pretty quickly hence its gambling as distinct from investing ? And the original poster did ask for the cheapest way to 'invest'. My intention isnt to be pedantic. Compare this to buy and hold .
At least if my bet on the markets goes wrong when choosing to buy a share, the company can always turn itself around. However if I make a spreadbet on that share and it expires in a month or the bet fails then what am I left with ? I've lost my capital with no chance of regaining it.
Is my understanding of spread betting as outlined above correct ?
Click to expand...

Well, the OP was specifically interested in the major international equity indices and commodities. While you can take very short-term positions on these, down to betting whether the FTSE 100 will be up or down in the next hour, there are also longer contracts available on indices & commodities, ranging from quarterly to annual contracts. You can close an open position at any time, so if, say, you buy the annual FTSE 100 contract, you don't have to hold it for a full year.

You can also roll-over an open position from an expiring contract period to the next period. This crystallises your loss or gain for the period, but you should not lose all your capital unless the markets have gone massively against you and/or you have taken a highly-leveraged position.

Look at some of the other threads for a comparison between putting up a small proportion of your capital as a spreadbet and keeping the rest in a capital-secure deposit and other forms of investment.

As for buy and hold, this is not a guaranteed long-term strategy either. For example, the Nikkei 225 is currently standing at roughly half its 1990 peak. If you had invested in it at that peak you'd still have a lot of holding to do before you made a profit, without even taking account of inflation over the last seventeen years.
 
You must log in or register to reply here.
Back
Top