Beginners Guide of an IPO : Investment in the stock markets with efficiency is a challenging task. As a beginner, learning the investment techniques and reading the trends seems mountain-big tasks. If you are planning to invest in IPO, this post serves as a good guide.
IPO is a great way to make good money in a short period. But not all the IPOs perform well. With good research on the company, you can make wise decisions. To invest in an IPO, you need to be familiar with the company. Learn the business segment the company deals with. Study the current scenario of the business and its future trends. Learn about the company’s promoters to analyse its potentials of growth. Detailed guidelines are further for better understanding.
What You Should Not Do(Beginners Guide of an IPO)
Never invest money in IPO with borrowing. There is no guarantee which IPO will work and which will shatter. If the IPO goes into blues, you might lose the money. Hence, use your own funds for IPO investment instead of borrowed ones.
The companies are entering the stock exchange with IPO for the first time. It is often difficult to scan their information of the companies. As the market is unpredictable, the risk is higher. It is very important for investors to consider their risk-bearing capacity. Never invest in IPO more than what you can afford to lose.
Important Things to Consider Before IPO Investment
Here are the not-to-forget things you should consider before participating in any IPO in India.
- Learn about the Company – Do go through the prospectus of the company. Learn the objectives of issuing IPO. How the company will use the funds. Refer the company’s websites and other material.
- Timely Application – Get the IPO application form from any broker. Submit the form with cheque well before the last date.
- Track the Over Subscription – Generally, IPO is considered as attractive investment options. Over subscriptions are normal to happen with IPOs. Hence, more applications result in fewer shares on your part. Keep a watch on the volume of applications the IPO is receiving.
- Current Market Trends – IPOs are closely related to the market trends. IPOs become stronger when the market trend is bullish. Investing in IPO when the market is strong is the best way to earn a higher
Opening Trading Account and Demat Account
Before you participate in IPO, open the accounts for trading. You need a Demat account for investing in IPO. If the IPO is allotted, you will need a demat account to store your share certificates. Demat account is essential to trade in the stock market. Contact any DP for opening account. You can open the account with nil shares as well.
[ Must Read ” How to Open a Demat Account “]
Online trading account ensures better transparency in all types of share market trading. Link the account with your bank account. Online trading account ensures safe and faster transactions and trading.
Another important thing to consider is to avoid becoming the prey of hypes. Since the company is entering the market for the first time, it does heavy marketing. Not all the hyped IPOs come out as profitable. IPO investment can be very profitable with proper research on company and market.
We hope that’s you like our article of ” Beginners Guide of an IPO “.
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