You might have often heard the term a company went public in newspapers or movies but you don’t know what it means. The phrase implies that the previously private company is now issuing shares for people’s first time to buy. When a private company approaches people to invest in them in exchange for shares it is known as initial public offering or IPO. In this guide you can learn about the steps on how to use just your phone and you can buy stocks offered in an IPO.
How to buy stocks in an IPO?
Earlier you could buy stocks in a newly launched IPO using applications supported by blocked amount and broker applications supported by blocked amount. How it works in ASBA is that you have to bid for IPO shares by filling up an application form. Once the shares are allotted to you the amount is debited from the account. While the broker here it is an intermediary broker who does the bidding for you. A broker will visit the form fills up the application form for part of the IPO and does all the paperwork on your behalf. Once this is done the broker then takes your signature on the form and then the form is sent to the ASBA.
The entire process was quite tedious and therefore common people often stayed away from investing in the IPO’s of new companies. The rules were changed from January 1 in 2019 and the government allowed the little investors to use the UPI system and invest in their stock. This opened the doors for many companies including Angel One to reach ordinary people and give them an opportunity to invest in an IPO and you don’t even have to go through any big pile of paperwork.
Things to keep in mind when considering investing in upcoming IPO
Understand the investor profile
All the investors are unique and therefore you must ensure that you invest based on the investor profile. But how do you identify your profile?
Financial objectives
you need to define what your financial goal is and what are you trying to achieve? Funding for a new house or planning for a marriage for thinking of going on a world tour. When you have clearly defined objectives you will know how much and on which stocks you wish to invest in.
Risk tolerance
The stock market fluctuates quite frequently. If you are planning to invest in stock for a huge company including reliance or Tata there will be no fluctuation in the price. But on the flip side if you are investing in a new company and relatively a small company that seems quite promising then a great achievement of them will boost the stock price while a failure can lead to a huge crash. You need to understand how much volatility you can handle without stressing and going broke.
Research about the company before buying
You should not make investments based on the stock price alone unless you are a professional trader with lots of experience. Investing in the stock market is a marathon not a Sprint so you need to be quite patient. Hence you need to invest in a stock that can give you great returns in the long term. One of the best ways to find out which companies are right for investment is to assess the company’s financial condition. If the company is financially secure then it can withstand any economic turbulence as we saw with the COVID-19 pandemic.
Track investment carefully
Several times investors invest in one of the companies and forget about keeping a track of their investment. The stock market is quite volatile so you need to keep a track of your investment and you will have the opportunity to sell and balance the portfolio to have maximum returns.
How can you invest in an IPO just using your smartphone?
After the government allowed purchasing stocks using UPI there were several new platforms known as discount brokers including Angel One. The platform has a mobile app that you can use to gain an insight into the upcoming IPOs and which IPO you should invest in.
Investing in IPO using Angle One mobile app
You need to have an Angel One account if you want to use the app. If you don’t have any one account then you have to make the account from the browser on your phone. Once you log into the Angel One platform you can find the portfolio option there. In that you need to select an IPO. From the list you can select the listed IPO you wish to apply for. You can see all the stock details like open date close date log size once you tap on the stock.
You need to enter your UPI ID that is assigned to the bank account. The application will get rejected if the person is applying from one other than their own bank account. You can select the type of investor for your application if you want to apply for the cut-off price then you can click on the cut-off checkbox in case you want to enter the different price while bidding simply click on the price field. Click on the checkbox once you complete these steps and click submit.
There are several things in stocks that you need to know before investing in one. Several companies might create a lot of buzz before launching the IPO. It is on you to choose the best option for investing in IPO.