Common Mistakes to Avoid and Best Practices
Introduction
Investing in IPOs is considered to be one of the best ways to grow capital in a short time. To apply for an IPO online, you simply need to open an investment account, select the bid price for the chosen IPO, submit the application and leave the rest to the exchange.
However, many investors make significant mistakes and put their money at risk. It is important to follow the best practices and stay away from the common pitfalls to avoid falling into this category .
Understanding IPOs and the Online Application Process
IPOs, also called Initial Public Offerings, are a way of raising funds (for the first time) for a company by offering shares to investors. Typically, IPOs last for 10 days, during which the interested investors must submit their bids on the exchange.
How Does the Online IPO Application Process Work?
First, a company launches an Initial Public Offering. This offering remains open for a certain number of days.
The application for an IPO can be placed through your investment account.
After logging in to your account, you have to submit bids for the number of shares you want to buy.
On successful submission of the application, you will get an IPO application number.
You can track the status of your application and confirm whether you have been allotted the shares.
Key Benefits of Applying for IPOs Online
Time-Saving: You can apply for an IPO online within a few minutes.
Minimal Efforts: You are saved from the hassle of calling or visiting your broker.
Transparency: You will have complete information about the details related to your bids and share allotment.
Common Mistakes to Avoid When Applying for an IPO Online
● Mistake #1: Ignoring Eligibility Criteria
Before finalising your decision to invest in an IPO, ensure that you meet the specified criteria, as failure to do so will result in the rejection of your application.
● Mistake #2: Inaccurate Information
When applying for an IPO, pay utmost attention to the details asked, as any wrong or incorrect information will make it invalid.
● Mistake #3: Poor Timing
While it is true that you can submit the IPO application even on the closing date, it is advised that you do it in the first few days of IPO opening. Last-minute subscriptions can result in application failure or rejection.
● Mistake #4: Overlooking Financial Implications
Having complete knowledge about the risks, like the non-allotment of shares and the possibility of incurring losses due to a change in share price, is essential to avoid unexpected losses and time wastage.
● Mistake #5: Neglecting Research
Before deciding on an IPO, check the company’s financials and conduct a SWOT analysis to make sure that the chosen IPO aligns with your goals and is worthy of your investment.
Best Practices for Applying IPO Online
● Use Reliable Platforms
Create your account on a reliable and regulated platform. Choose a platform that provides different services under one roof and has a user-friendly interface.
● Understand the Terms and Conditions
Read the terms and conditions given in the IPO prospectus. Pay close attention to risk factors, lock-in period and restrictions on shares.
● Seek Professional Advice
As thorough research is a prerequisite for investing in IPOs, it is suggested that you consult professionals who can offer guidance on selecting the right IPO.
Conclusion
If you want to apply for the newest IPOs in India, it is vital that you go through the eligibility criteria, provide correct information, conduct detailed research, create an account with a reliable broker and contact financial advisors.
Follow these steps and apply for an IPO online easily and effortlessly.
Suresh KP is the Founder of Myinvestmentideas. He is NISM Certified – Investment Adviser and NISM Certified – Research Analyst. He has been analyzing financial markets in the last 20 years.He can be reached at suresh@myinvestmentideas.com Latest posts by Suresh KP (see all)
