We’ve all seen the Joe Bloggs jeans brand, even those of us who have no sort of clothes sense.
Well the person behind it was declared bankrupt. It was nothing to do with the Joe Bloggs brand, which is still making a lot of money, in fact the personal wealth of its owner was once estimated at £60 million, even with a taste for expensive cars and conspicuous consumption this takes a long time to lose simply through spending – although I’m told that it’s far easier to spend through money than you would ever imagine. However the creator, Shami Ahmed, a former market trader, had another addiction, financial spread betting.
He won millions spread betting but lost many more millions resulting in a downward spiral of debt and taxes owed. Not many of us will frankly have this problem as short of a hyperinflation we won’t be loaned millions by spread betting firms. However the very power of spread betting to make massive returns also means that it can make massive losses.
So here are a few tips to avoid the worst.
- Use stop losses. Yes, they are expensive and you can find yourself squeezed but they do stop the downside. If you invest in stocks you have a natural limit, which you don’t have with a spread bet
- Have a monthly budget and never, ever, break that
- Discuss with your partner, a close relative or a good friend about your spread betting so that they can spot any problems
- Don’t chase losses. Seriously, this will rarely work and is far more likely to wipe you out than any other strategy.