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Why Should You Invest In Ipos?

By Author: Nirav Singhaniya
Total Articles: 2

Novice investors often get confused when it comes to investing in current ipo. Investors think whether they need to invest in the Initial Public Offering of a new company that is planning to go public or not. In this article, discover what is ipo and why you should make an ipo investment?

 Investing In IPO

IPO is announced by a private company when it is looking to sell its shares to the general public. This happens when the company has their founders offer their shares to the public or through the issue of new shares that further enables them to raise enough money for growth & expansion. In order to invest in the latest IPO, you will have to first find a firm that is planning to announce its IPO. You can do this by scanning the forms that are filed with the SEBI. You can go through the prospectus of the companies that are planning to go public and get an idea of their business plans as well as purpose. Once you have finalized the IPO that you would be investing in, you need to register yourself with a reputed brokerage company. When firms issue their IPOs, they notify the brokerage companies who later notify the investors.

Professional brokerage companies such as IndiaNivesh need their investors to fulfil certain criteria before they allow them to participate in the IPO. Some brokerage companies also specifically mention that investors with specific funds in their accounts or specific transactions can purchase the IPO. When an investor qualifies, the brokerage company makes him/her sign up for the IPO notification service and provides alert about the current and latest IPO.

Advantages of Investing in IPO

Earn High Profits: When you invest in IPO, you get the opportunity to earn quick profits in a short period of time. Thus investing in the IPO allows you to increase your wealth with minimal investment.  For instance, if you make an IPO investment in a new company that offers innovative technology and that firm manages to impress the market as well as earn profits, then you will automatically earn higher returns.

Fulfil Your Long-term Objectives: Investment in an IPO is similar to investing in equities. This means that they possess the capacity to provides you with huge profits in future. The profits earned through IPO investment can help you achieve your financial objectives in the long run. This could be anything such as planning retirement or purchasing a house. It is worth noting that the IPO market in India is expanding rapidly. In 2017 alone, the stock market in India generated around $11 billion via IPOs.

Increased Price Transparency: The price of every security that has been issued is mentioned clearly in the order document of the IPO. Hence, you can access similar information as other big investors. This, however, changes after the IPO has been released. The prices of the shares post the IPO will depend on the changing market rates as well as the best pricing that stockbrokers can provide.

Purchase at low price and earn big: When you invest in the IPO of a small company the price is often low. This can grow into a huge amount at a later stage. That’s because the price of that company’s stock may grow massively and if you don’t invest initially then will regret later. For instance, when Amazon had floated its IPO for the first time in 1997, the price of every share was $18. Hence, if you had invested $5000 in Amazon’s Initial Public Offering, then your shares’ worth would have been more than $2.5 million by April 2018.

Investing in IPO can be considered as a great source of investment if you have the proper knowledge. To invest in IPO, get in touch with reputed stock broker like IndiaNivesh.

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