Investing online in IPO or initial public offering has many benefits. The main advantage is that it is a way to generate capital quickly. Once you invest in the IPO, you get an allotment of shares. Online investing in IPO makes the investment process very easy and convenient.
Here are five name reasons why online investing in IPO is a smart decision:
- Chance to make huge gains: The current stock value determines a company’s initial offer price. However, once you get your shares, you can make a considerable profit if the company opens at a higher price. The profit happens due to something known as listing gain.
The offer price is often the lowest price at which you can find the shares of a small company that has the potential to grow big.
- A part of the company from the start: Investing in an IPO online lets you be associated with a company from its inception, which is quite helpful. As the company grows, its investors also get the chance for rapid growth.
This way, you can consistently make money in the long run.
- Discounts for Retail Investors: If you are a retail investor, when you invest in IPO, there are many discount opportunities available for you. Many companies currently issue shares to retail investors at a lower discounted price.
Hence, added with the possibility of listing gain, this discounted price makes sure that you are already at a great advantage when it comes to investing in IPO and making money from your investment.
- More transparency: Online Investing in IPO is better than investing in shares listed for long. It is because IPO has greater price transparency. The price you get when you buy shares from a company already listed is affected by changes in the market rates. It is also impacted by what your broker can provide.
But when you invest in IPO online, the price you see is the offer price which is the same for everyone as there are no stockbroker price differences, etc. In other words, you and big investors have access to the same information.
- No lock-in period: Investing in IPOs does not have a lock-in period, unlike investing in shares from a secondary market. SEBI guidelines ensure that your amount debits only if the listing allocates your shares.
You do not have to pay beforehand and wait for returns if you do not get the shares. The application period lets you earn interest until you receive the shares.
Online investing in an IPO works well for someone looking to build wealth without investing in listed shares.
In recent times, people who have invested in IPOs of companies with great potential to grow (such as Nykaa) have gotten huge returns on their investment due to the stock prices skyrocketing once it was listed. Additionally, investing in an IPO lets you directly interact with the company. So, you can be sure that the money you invest goes into growing the company.