Thinking of investing your savings into something more productive than letting it rest in the bank? Heard so much about IPO, but do not know how to start? Do not worry. We will help you out with understanding the basics of IPO.
Even after so many years of Initial Public Offering (IPO), it is still the most reliable method of investing in shares. IPO refers to the selling of initial shares by a company. This means that when a privately owned company wants to raise its capital through the public. When a private company wants to go public too, they often raise it via IPOs. Initial Public Offering (IPO) is usually meant for bigger business organizations which are already established and have a good experience on the market.
How to Buy an IPO?
Here are a few things that you should do before buying an IPO:
1) You have to open a Demat Account and a Trading Account, if you still do not have one.
2) Understand your investment requirements properly and the risk that you would be willing to take up. Do not get too tempted, and try not exceed the criteria that you have set for yourself. Set it responsibly and wisely.
3) Keep consulting with stock brokers for the current IPOs being issued by different companies. You can keep checking the online portals of Stock Exchanges like BSE and NSE etc. You can also refer to other online stock brokers.
4) These online or in-person brokers would provide you with an IPO Application Forms for free.
5) Before filling up a form, consider all the facts related to the company you want to invest in. Check for the goodwill of the company. Properly, go through their financial records and their policies. Make sure that you know every necessary detail about the company before you actually invest in it, to avoid risks.
Benefits of Buying an IPO?
What is so special about investing in an IPO? Well, now you will know why people are so adamant about investing in IPO.
● Ownership: Investing in an IPO gives a sense of ownership to the investors.
● ROI: They regularly get a share in the profits of the company through dividends. Thus, they get a good return on their investment too.
● Security: IPO is a secure form of investment because companies have to complete certain legal formalities before being able to issue IPO. These legal formalities are monitored by a regulating body.
● Transparency: By investing in an IPO, you get more transparency about a company. The company is bound to present you with their financial records, their goodwill and their performance track records. And all the other details that are necessary for you to know. This not only makes it more secure but also assures you whether the decision that you have made is correct or not.
● Long-Term Investment: Investing in an IPO is especially beneficial if you are planning on investing for a longer time, and do not want to trade it off very quickly.
Investing in an IPO is a safe option and you can definitely choose to do it. But, to be completely honest with you, there is a risk associated with investment in an IPO - in case the company goes insolvent or bankrupt, you may lose all your invested money. So, choose responsibly and wisely and do not get carried away by attractive perks, without rationally analyzing it. Happy investment!