Spread Betting

Strictly speaking, spread betting isn’t an alternative investment at all – it has more to do with gambling than investing! However, it is worth considering as part of your overall alternative investment strategy because it is not pure gambling (e.g. like roulette) and even buying normal shares has a strong element of gambling in it.

Here’s how it works – and bear in mind that spread betting can be applied to all sorts of things from property right through to financial markets.

Start off by understanding what spread betting actually is, and what it involves. A bookie will quote a spread between two figures – in essence, they are saying that a particular outcome will be between the lower and the higher figure of that spread.

Say, for example, you want to predict the outcome of the FTSE 100 Index in three months time – if you’ve been reading the financial press day in, day out, you might feel fairly confident that you could do this! The bookie might quote a spread of, say, 5010 to 5020 for three months time. What you then have to do is to decide if it will be higher or lower than that.

If you feel sure it is going to be higher, you will ‘buy’ at the top-end of the spread at 5020. If you feel certain it will be lower, then you will ‘sell’ at the lower end of the spread at 5010.

Let’s see what might happen. Say you think the market will go higher, so you 'buy' at £10 a point at 5020. The market rises, just as you thought, and the settlement price is actually 5095. Well done! You will win £750. How? You take the 5095 closing price and deduct the 5020 opening price which means a difference of 75. You then multiply this 75 by £10 a point which gives you £750. As another example, say you think it will be lower. You might therefore decide to 'sell' at £10 a point at 5010.

Now imagine that market falls and the settlement price is actually 4950. You would, if this happened, win £600. Again, you take the 5010 opening price and deduct the 4950 closing price which means a difference of 60. Multiply 60 by £10 a point and you have £600.

So, these are the potential rewards – and they can of course be higher if you stake more and the outcome is even more in your favour. The rewards are considerable. Naturally enough - as rewards and risks always go together – the risks are just as considerable. Imagine the market went the other way – you could be £600 or £750 out of pocket!

There are several companies (bookies) who specialise in taking bets on various stock markets and commodities.  As with all investments, you must undertake your own due diligence.

Spread betting is just one idea covered by The Alternative Investor.

Beware of Limited Edition Collectibles

You may have read my recent post covering a recent newspaper article on one man’s Action Man Collection.  If it is your intention to invest in collectibles like this, you should spend some time researching which items are worth buying, as not all items will actually have an investment value.  So today, I have a word of warning.

Some manufacturers will market what they’re selling as ‘limited edition’ collectables. This should set alarm bells ringing the moment you see the phrase! It’s often little more than a promotional ploy to encourage sales.

Just because a manufacturer says something is a ‘limited edition’ item (and, by implication, is valuable and worth having), doesn’t mean it is.

You’ll even see the phrase ‘limited edition’ all over some plastic movie action figures in toyshops – and 100,000s of those are probably being produced. In a strictly legal sense, it may be a ‘limited edition’ but they are limited to so many that they’ll never sell out and will still be being found in backstreet shops’ bargain bins in five or ten years!

A useful tip - the more you see something advertised, the less likely it is to turn into a valuable alternative investment. If big money’s being spent on advertising, the manufacturer has a lot of items to sell!

For more tips and ideas on alternative investments, have a look at The Alternative Investor. 

Investing in Your Hobbies and Interests

You may have noticed that my recent posts carried a common theme.  They all covered hobbies and interests.  For example: wine, coins, antique and classic cameras and even toys.

The point that I am getting to is that alternative investing should be both profitable and fun – and one of the best ways to achieve both of these goals is to invest in your hobbies and interests.

There really are opportunities everywhere.  Whether you like taking photographs, drinking wine, reading timeless classics or watching films, you can probably uncover an alternative investment in your area of interest.

The beauty of investing in your hobbies and interests is that it’s simple to do. All you really have to do is to follow the same golden rules of investing in antiques and collectables. Apply these to your own hobbies and interests and you’re sure to pick some successful alternative investments.

If you’ve had these hobbies and interests for some time, you’ll probably be up to speed already on what’s what – and may well know more than many of the experts. That gives you a head start!

If you want to know more about investing in hobbies and interests (or, to use the correct expression,  antiques and collectibles), why not take a look at The Alternative Investor.

Kodak Files For Bankruptcy Protection. Is Now The Time To Invest In Cameras?

Founded in 1880 by George Eastman, Kodak became one of America’s most notable companies, helping establish the market for camera film and then dominating the field. But it has suffered from a variety of problems over the last four decades and this week Kodak filed for bankruptcy protection.

We all know the name, and for many of us, it was a sad story indeed.  But the reporting of this story made me wonder whether this will give rise to an increase in nostalgia driven demand for antique and classic cameras.

Until now, I have always felt that there is not a great deal of money to be made from cameras in the antiques and collectables markets.  Maybe now, that will all change?  I guess only time will tell.  Nothing in life is certain.

If you have an interest in investing in cameras as an alternative investment, you could start by looking at McKeown's Guide to Antique and Classic Cameras.

For more information on this, and other alternative investment ideas, why not take a look at: The Alternative Investor

Investing Profitably In Wine

Wine is an interest for many people – just think, you could make money from what you enjoy drinking! This is a popular hobby that could be turned easily into another alternative investment opportunity.

Even if you only partake occasionally, it’s worth looking at wine as a possible addition to your alternative investment portfolio. You could start – in addition to getting magazines from newsagents and books from libraries – with a wine tasting. This is a great way to build practical know-how and to meet experts and fellow enthusiasts.

Contact the Association of Wine Educators – this Association will give you contact details of members who organise wine tastings in your area. You could also go on wine-tasting tours which are both informative and fun.

Another website specialising in this area is www.wineinvestment.org

Wine investment is just one of several alternative investments covered in a new guide The Alternative Investor.

Investing In Antiques and Collectibles

Reading the newspapers this week, it seems that during these uncertain times, the world of alternative investments has gone mad!

Earlier today I mentioned an article in the Sun newspaper (17^th January 2012) reporting coin collecting has become a rising trend.  I was so interested in this article that I almost forgot to mention another article in the very same newspaper!

A lovely story was printed about a toy enthusiast, Richard Briggs, who had been collecting Action Man memorabilia for some 12 years.  According to the report, he now has an impressive collection of 150 items, many in original packaging, that he plans to sell for £10,000.00.

The report does not mention what he paid for the items, but I would imagine that he paid far less than the £10,000 he aims to bank!

Many collectables like these are linked with the collectors’ childhoods – they are nostalgia-driven.   Unfortunately, we do not know whether Mr Briggs will achieve his goals, that will probably be down to whether or not he has his timing right when he comes to sell. As collectors age, and no new collectors come into the market, interest and prices fall away.  Timing the sale is therefore just as important as the initial purchase. 

Whether or not Mr Briggs has got his timing right and makes a profit now that he has come to sell, it would be fair to guess that his exposure to risk very low as he probably built up his investment with several small one off purchases over a long period time.  Not only that he probably had great fun in building his collection!

If you like something, it can be both an investment and a pleasure. If it doesn’t increase in value quite as much as you’d like, you’ll still have had the pleasure of owning it, looking at it, touching it and displaying it makes alternative investments like this a form of investment that you can enjoy!

In the alternative investment world, investments like these are collectively termed as antiques and collectibles.  You don’t have to invest in Chippendale furniture to be an investor of antiques!

If you would like to know more about this and other alternative investment ideas, why not visit The Alternative Investor.

"Coins Market Increasing By 10% Per Year"

I have mentioned coin collecting before (Saturday 19th November 2011), so I couldn’t help but notice when a short article appeared in the Sun newspaper today (Tuesday 17^th January 2012) covering this very issue. 

According to the report, Stanley Gibbons, the stamp and coin collecting specialist, has seen interest in rare coins increase five fold since the launch of the service last summer.

Michael Hall, the chief executive of Stanley Gibbons, is reported to have said that the coin market is “very strong” and that it has been “going up by around 10% a year”

You may wish to have a look at Stanley Gibbons website and decide for yourself whether this is the sort of investment that interests you.  As with all investments, however, you will need to do your own due diligence.

If you are interested in coin collecting as an alternative investment and want to know more about this subject, why not visit The Alternative Investor.