Indian markets these days are witnessing a sharp growth in stock investment in the past couple of months, and from what we can understand, the trend will definitely continue for a few decades. Since investing in stocks can be tricky, many investors also suggest looking at IPOs to get the best returns in the long run.
Financial advisors also suggest investing in such initial public offerings. However, one should not be in a rush and start with a small sum of cash. If your company happens to make decent business, chances are the IPO will get oversubscribed and there won’t be allotments.
- You have to first understand your financial goals from a financial perspective and then you can invest depending on your appetite. Winning at the market is never a smooth read. There will be ups and downs. You need to be prepared for what’s ahead.
- Read the documents carefully before you make an investment. You have to consider all the risk factors, the financials, the defaults, litigations, etc. If you can get a good business overview, a good understanding of the instructions should be able to help you out.
- Always go through all the advertisements issued by any company for basic stuff like the issue prices as well as the basis for your allotment.
- Knowing the DRHP, which is Draft Red Herring Prospectus. This is filed by companies when they want to raise the company from the public by simply selling their shares to other investors. It shows you companies use the money, how it can be raised, and the risks that come with it. Getting a good understanding of this will help you make a better decision.
- Never invest using money that has been previously borrowed by you or someone else. Also, never set any unrealistic expectations for your returns.
- Many experts also believe in the whole delight and exuberance of investing, but weak performances in the stock market could happen at any time and spoil your dreams. So, make sure that you don’t keep your hopes too high!
- You should always invest in an IPO that is based on your advertisement, advice, or even rumors. They will always become wary of gains that are unrealistic or even jackpot profits that are often assured by many.
- Never invest in any IPO until and unless you have read the documents carefully. Every offer document will give you a list of facts, details as well as promises offered by the issuer. It is important for you to read it well regardless of whether you would like to invest in that specific issue or not.
So that was a look at some of the things you need to keep in mind when it comes to applying for a few IPOs across India. If you have more concerns or have a financial query, you’d like to share with us, make sure to share your query with us and we will request our industry experts to answer your questions. For more information or relevant topics regarding finance or to know about specific IPOs like Boat IPO, Mobikwik IPO, Pharmeasy IPO etc. make sure to visit our blog.