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SHOULD YOU INVEST IN INITIAL PUBLIC OFFERINGS?

INVEST IN A COMPANY'S POTENTIAL GROWTH

Deciding to invest at this level requires you to have an in-depth knowledge of the market and the company you choose. You can invest in IPOs through an online broker. And if you have questions about IPOs or investing in general, you can speak with a local financial advisor. 

WHAT IS AN IPO?

IPO  stands for “initial public offering” and refers to the first time a company going public to offer its shares. It’s basically a stock market launch in which newly issued shares of a company are sold to institutional investors and retail investors (public). They can also be shares that were previously held by the founders and early investors. To invest in an IPO, you have to be among the first to buy shares in the company after it goes public. 

 

An IPO is a great opportunity for an investor to gain 10% to 60% or more on their initial investment in the few minutes it goes on the open market. It can increase significantly in value.

 

In the past, some people were lucky enough to buy shares in IPOs of companies and gain huge returns, but these days, it’s not so easy to gain such success because of scrutiny. As a result, it’s best to analyze your approach wisely.



HOW TO INVEST IN IPO's STOCK?

To invest in stocks at an IPO stage you’ll need to work with a brokerage firm or an online broker that offers IPO transactions. Not all broker handles IPOs, so you’ll need to have an account with one that does. Once you have opened an account with a broker that offers IPO transactions, the next step is to determine if you are eligible to invest. Some brokers will only allow investors to participate in an IPO if they have experience in taking investment risks and if investors have a significant amount of assets with the firm or trade with them often. And even if you find the right broker to use, having access to buy the IPO might be limited. 

 

However, if you manage to get into an IPO sale, I highly recommend that you chat with a representative of the brokerage firm if you are not familiar with the process of purchasing an IPO. 

 

The process is, however, similar to purchasing a stock on the exchange. Just pick the number of shares you want to buy and set up your order type, and once the transaction is completed successfully the shares will be added to your account like any other security.

 

Whenever the stock goes on to the open market, the price may go higher or lower. Some investors may try to sell to gain a quick profit, and others may hold on to the stocks for medium to long-term gain. 

 

Below are two popular online brokers that you can check out to invest in IPOs.