It’s no secret that well-planned investments in the stock market can contribute greatly to your wealth creation. However, did you know that betting on unlisted shares can also give you lucrative rewards over time? This can be hard to believe considering that India is a country where people have traditionally approached the unlisted space with caution and hesitation. One of the major reasons for this is the myths that surround the unlisted share market. These tend to keep potential investors away, thereby making them lose out on financial gains. If you too are considering investing in unlisted shares and are holding back because of these myths, we are here to tell you how they are false:
1. Pre-IPO investments are for high net worth investors and people in the know.
In the last few years, the pre-IPO market has opened up and is now available to the masses. All you have to do is reach out to an over-the-counter (OTC) company like Unlistedkart and voila! You get to diversify your stock holdings and share them with the public to buy. All your stocks will be kept in your NSDL (National Securities Depository Limited) or CDSL (Central Depository Securities Limited) Demat account.
2. Unlisted shares are expensive.
You might think that the demand for unlisted shares is driven by rich individual investors hoping to cash in when their pre-IPO companies go public. Therefore, these shares must cost a lot of money. This is not true. OTC companies are free to use and ask you to log in for a minimal charge that includes convenience and technology charges.
3. Most unlisted companies are profitable.
The unlisted market is driven by a number of factors like present economic conditions, and information about the company you want to invest in. Not all pre-IPO companies get listed; make sure to choose wisely. A classic example is when in 2008, for the first time in Indian stock market history, the magic of Reliance completely failed. On opening day, Reliance Power’s stock rose up to 19% to trade at Rs. 538 for all of four minutes before plunging back to Rs. 355 and never recovering even close to the issue price.
4. Unlisted share trading requires strong financial skills.
Investing in the unlisted share market certainly calls for developing certain know-how of the market and finding the right shares for your risk appetite. However, OTC companies like Unlistedkart create up-to-date research reports that include publically available company information, financial statements, and custom analyses. All you need is a keen interest in the market.
5. Unlisted shares do not offer high growth opportunities.
More often than not, unlisted companies are small in size and yet to reach a stage where they can go public to avail funds for their capital requirements. So when you invest in a company and follow through with its growth when it lists on equity markets, it often yields high returns owing to the small base effect.