john banks

What sort of typical duration would you get with a bet on IG Index for say FTSE 100 buy? The spread looks about 0.5% which is attractive, but if you extend you pay about half of this for each extension which could make the charges add up. If you wanted to hold it for say a year, would you get quoted that far ahead?

2000TLondon

Yes, they quote futures on all indices, you don't have to buy the FTSE on a daily bet......

You will need a LOT of margin for this "bet" though, and it is not a bet that I would make without having had plenty of experience on less volatile single stocks.

john banks

I'm building a portfolio from the proceeds of a house sale whilst I rent for a while (at 3.2% per annum of the property's value ) and watch the housing market.

With ISA allowances used, not wanting to push the wife into the 40% tax bracket from interest if held as cash, I need a plan when the CGT allowances are used up each year from the proceeds.

So my understanding is that I could model for example a FTSE 100 index tracker using IG index and pay no tax on any gains. I don't want to get into futures, just model conventional investments with which I'm happy with the risk.

Another interesting option is a hedge for/against regional or national house price indices, just in case I'm wrong and property continues to soar

However, the actual cash that I would be investing I believe I still hold most of it - this is the margin with IG Index? So I suppose I go to other CGT exempt investments - gilts etc?

It is quite complex deciding not to buy another house for a while...

MY00PPP

as per above - the longer the 'bet' in terms of period, the bigger the spread +/- you will have to overcome before you start making any profit.

if it were me, I would consider using spread betting (dont forget it is a bet not an investment!) for shorter contracts and open an account with an online stock broker all of whom will have Footsie tracking options to invest in.

I have never had to give my NI number to any online broker so unsure if this helps with your taxation q.

RM

PS - spreadbetting... 'the crack cocaine of gambling'

imlach

If you're using IG, you can buy future contracts on the FTSE.

At present, they are quoting :

- Oct 06
- Dec 06
- Jan 07 (end of year)
- Mar 07

The latter is on a controlled risk spread of +-13pts (ie, guaranteed stop) - you must also deposit enough money with them to cover the stop. The spread will be lower if you prove you have sufficient liquid funds available to them to cover losses, and don't want a guaranteed stop. If you're in for the long term, 13pts is not a big deal, given (presumably) you're looking for the FTSE to rise above 6000.

If you buy a Mar 07 'bet', you can forget about it until then if need be - there will be no further charges.

imlach

I'd take issue with that statement.

Spreadbetting is no more or less a 'bet' than traditional investment methods.
All investing is 'gambling'.

2000TLondon

True!

Also, you will need a very large stop limit on a March FTSE bet, several hundred points below (or above) opening to cover all eventualities. It is pointless trying to work on small stop limits. And the FTSE is relatively volatile, over a week (even a day) you could expect to see movements of a few hundred points.

john banks

Thanks.

stevem2k

take a shorter contract and roll them over.

or use a CFD .


Steve