Trading and Investing with IG

Saving to secure your future with a beginners look at trading and investment options

As the world heads into a post-pandemic recession, one might be wondering what the best course of action is in terms of investing for the future. With the current state of uncertainty, there is a desire for surety and profiting on capital where possible. If you’d like to save and grow your investments, these are the options available to you with IG, a leading investment firm.

With IG, you can trade or invest your money, both of which allow you the opportunity to profit from price movements in the financial markets. If you trade, you’ll be taking a speculative position on a market price, while investors will become an owner of an asset. Let’s explore each of these options more in-depth.

Trading and investing are both ways to generate returns on your money. By doing this, you are taking on a calculated risk, which can result in higher returns than interest at a bank would, with aims for annual returns of between 10% and 15%. Investing occurs most frequently with shares and equities on the stock market. The other option with IG is Exchange Traded Funds (ETFs) and investment trusts.

IG are a company that offers some of the best fees associated with investing, which means you can make the most out of your returns. They provide you with access to 10,000 shares, funds and investment trusts.

IG helps you achieve your investment goals. From their portal, you can manage your own investment decisions with an IG share dealing account, or choose a readymade, diversified IG Smart Portfolio that is managed on your behalf, tailored to your goals and risk profile.

TRADING

Traders work on a short to medium term basis, profiting from volatility based on markets that are rising and falling. The initial investment required is a deposit or margin, and the returns are profits made by profiting from long and short positions. Going ‘short’ means you can take advantage of the falling price in a market. You’ll be taking a position without the commitment of taking ownership of it.

You can trade shares, indices, forex, commodities and cryptocurrencies with IG. When dealing with leverage, you get the full exposure in exchange for a small deposit (a margin, which is calculated as a percentage of the total value of the trade), which magnifies the outcomes, whether it is a profit or a loss.

Trading has shorter investment times, with positions being held for as long as a few weeks or as little as a few minutes. The key here is to look at the smaller movements in a market, which a long term investor would ride out.

The returns on trading are based on capital investment, the strategy and the risk management practices. Any losses are calculated on the full value of the trade, not only your initial investment. It is therefore risky and lucrative, with the potential of making high returns every month. IG helps manage these risks with stops and limits that can automatically close your position. and aim to secure profits in volatile markets.

There are various trading styles, based on your frequency of trading, the time you have available, your risk tolerance and account size. The four primary trading styles are day trading, scalp tradition, swing tradition and position trading.

INVESTING

Investors have a longer-term outlook and assess a business in terms of its health and growth outlook. The most common markets to invest in are shares and trusts. In other words, you are holding onto an asset to profit from it at a later stage. This also affords you specific rights, such as

voting in company decisions and gaining dividend payments.

When investing in IG, there is no minimum amount of investment required per month. The amount you need to begin will be dependant on the asset you’d like to have in your portfolio. When investing in the value of an asset, profits are made in the form of capital appreciation and dividends. Capital appreciation is the return on investment determined by the difference in price between the price you bought the asset at and the price you sell it for. Dividends, on the other hand, are paid by companies to their shareholders, depending on their performance.

When you settle your shares after selling them, the money will make reflection your IG account, which you can then withdraw or reinvest. While dividends are not always guaranteed, if you receive these, they are paid directly to your IG account in cash. The risk is capped at the price you purchased the asset for, meaning you won’t lose more than you paid, not accounting for additional fees. Risks are calculated based on financial goals, the time available and the amount of capital you have to invest.

For those who are interested in trading but aren’t ready to trade on live markets, there is an IG demo account that allows you to practice trading without any risks. From there, you can choose your asset to trade and open your first position. Once you’re comfortable, you can create a live account.

For more info, visit www.ig.com/za.

Risks are calculated based on financial goals, the time available and the amount of capital you have to invest.