What happens if the market crashes...?

parc

(Original question edited to make it a little clearer)

I know exactly how spread betting works but I want to know about investing in an index tracker

My question is:

Investing: If I invest, say £1000 in a FTSE tracker when the price is say 40.0 and it then drops to 20.0--> I would have just £500 right? (not counting fees)

Spread betting: If it was spread betting account I would be down 19 points so that would mean 19*1000 = 19,000 in the red! (not counting the spread)

So....Investing -> loss of £500
Spread betting -> loss of £19,000

Am I on the right track here?

later12

You won't make a loss (or profit) with any investment you undertake in $/£ cost averaging until you make that investment.

And yes, spread betting is quite different again. For one thing, you never own your underlying stock in spread betting; it's literally just more of a gamble.

Here is a clearer definition of spread betting

http://www.investopedia.com/terms/s/spreadbetting.asp#axzz1jjbAKfQc

andrew

moved to investments and markets

parc

Sorry some of that sounds retarded. Falls more than 100% lol

I know exactly how spread betting works.

My question is:

Investing: If I invest, say £1000 in a FTSE tracker when the price is say 40.0 and it then drops to 20.0--> I would have just £500 right? (not counting fees)

Spread betting: If it was spread betting account I would be down 19 points so that would mean 19*1000 = 19,000 in the red! (not counting the spread)

So....Investing -> loss of £500
Spread betting -> loss of £19,000

Am I on the right track here?

OfflerCrocGod

You are if you have £19,000 in the account, otherwise it's closed with all the money in the account gone. 0 is what would be left. The spread betters won't let you lose more then what is in your account, they may send you margin calls.

parc

Cheers for the reply but I already know how spread betting works. I want to know about investing in a FTSE tracker

My question is:

Investing: If I invest, say £1000 in a FTSE tracker when the price is say 40.0 and it then drops to 20.0--> I would have just £500 right? (not counting fees)

Also would it be possible to loose all of this £1000 say if the market, hypothetically speaking, dropped 100%.

Let's say if drops 100% in February, and then rose 120% in March, would I still have my original investement +20%

Shelflife

You dont "invest" with spread betting. It depends on how much you buy a unit at.

If you buy at 40 for €25 and the price drops to 25 then you will lose 15 x €25
= €375.
if you buy at 40 for €50 you would lose €750.

Unless you have a line of credit, you will have to have the max downside (in this case 40 ) in your account before you will be allowed to trade.

Afaik there are time limits on each deal, you cant just let it run indefinetely.

parc

Lads maybe I'm not being clear here (don't want to sound rude)

My question is about investing in a FTSE tracker via a bank that offers it. Nothing to do with spread betting. I was just using spread bettig as a comparison.

My qesion is on investing: If I invest, say £1000 in a FTSE tracker when the price is say 40.0 and it then drops to 20.0--> I would have just £500 right? (not counting fees)

Also would it be possible to loose all of this £1000 say if the market, hypothetically speaking, dropped 100%.

Let's say if drops 100% in February, and then rose 120% in March, would I still have my original investement +20%

strmin

parc wrote: »

Lads maybe I'm not being clear here (don't want to sound rude)

My question is about investing in a FTSE tracker via a bank that offers it. Nothing to do with spread betting. I was just using spread bettig as a comparison.

My qesion is on investing: If I invest, say £1000 in a FTSE tracker when the price is say 40.0 and it then drops to 20.0--> I would have just £500 right? (not counting fees)

Also would it be possible to loose all of this £1000 say if the market, hypothetically speaking, dropped 100%.

Let's say if drops 100% in February, and then rose 120% in March, would I still have my original investement +20%

Yes is answer to all your questions.

parc

Thanks a mill

The Irish Riddler

1. Yes.
2. It depends on other factors.

Without being rude you are asking it arseways so that is why your not getting proper answers.