Tips on How to Invest in an IPO and Types of Equity Investments

Tips on How to Invest in an IPO and Types of Equity Investments


There are two types of market for investing in equities. These are primary market and secondary market. In case of primary market, you need to buy the securities only during the time of an IPO. Whereas in case of secondary market, you can buy the securities anytime you want. There are lot things you need to look in to while investing in an IPO.

Following are the tips that will help you to invest in an IPO:

Understand what you are getting in to. Make sure that you have done all the necessary research about the company before investing in an IPO. Collate all the facts about the company that will help you in the decision making. Once you have decided that you have planned to invest in an IPO take the second step. Don’t get swayed by the heavy marketing and promotions done in the media by the IPO companies. Analyze yourself and invest on the basis of that.

If you don’t have a demat account, open an account with a broker who is participating in the IPO issue. In case, if you already have a demat account, ask your broker to buy the shares in the IPO. Tell your broker the amount you need to invest in the IPO. If you are still in two minds about investing in the IPO, apply for a meager amount rather than huge sums.

Take the application form from your broker. Forms are free of charge. You can also take the forms from other agents or vendors, in case if your broker is short of forms. Read all the guidelines given in the application form and fill the form accordingly. Don’t commit any mistake in writing the application form; otherwise it may result in to your application getting rejected on the onset.

You can also apply online, in case if your broker provides you that facility. Ask your broker that if they have a blocking facility where the application amount will be blocked in your account till the shares are allotted to you. In case if you are not allotted the shares, the blocked amount will be unblocked in your account.

Be sure of the issue closing date and make sure to apply before the issue closes out.

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