With the change in times and advancement in technology, it is much easier now to apply for an IPO.
Any individual can buy shares and can decide on their own but the question comes to the light that is it beneficial to the investor?
The answer to the question lies in the rudimentary approach of selecting the shares. Intricate research of the companies for investment is a primary step of investment.
Before selecting an IPO investors should study the business model, corporate governance, and market valuation of the company. In the market companies sometimes have short-term motives. Instances like raising funds to repay their debt are not a considerable factor for an investment decision.Over a while, the market itself demonstrates the true value of the company. For investors, it is extremely important to assess the company to make timely decisions regarding exit and holding the share.
Diversification is also a crucial element for an investment decision. Diversification in the portfolio saves investors from combined loss as the aids to share risk among various stocks. However stock above 20-30 companies is not much profitable for the investor.
It is advisable to distribute the investment among multiple companies not exceeding 30 stocks of different companies.
Although the stock market is popular for its risky behavior it is better to invest money available in hand rather than borrowing. It is way too risky than the market itself as it brings double loss to the investor.
In case if the IPO lists at a discount the investor will be in debt to pay the amount along with the interest to the bank. Here the investor losses all the money and has to bear the repayment obligation as well.
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