How IPOs can be a smart investment strategy to amass wealth


Every IPO represents an opportunity for both the company and the investors. It may not always get you gold. But when it does, it gets you a huge profit.

2021 was not just the year of pandemic and vaccination, but also the year of IPOs. In India over 51 IPOs were floated in the market by October, which raised a total of ₹90,000 crores. Those who choose the right IPO have won the lottery.

But there are a few unlucky ones, where the company failed to perform as expected. But this is not the case with everyone as it will double just months after its public entry. There are four unique ways to invest in the right IPO.

First is the early bird investor advantage. When you invest in an IPO, you invest in the time the company is transitioning from private to public. It is where you invest in the stocks of a high potential company.

These stocks have the huge potential for growth and expansion, that too quickly. If that company offers cutting-edge technology, breakthrough solutions and is a market favourite, it can be assured that massive profits will be gained.

Second is the discounted investments with fat profits. Most of the companies that float their IPO offer it at the lowest prices. These companies are small, fast-growing, under-the-radar companies.

When the company grows, the news of its growth will reach everyone. That will ensue in the rise of prices. Those who were not able to buy the stocks have missed an opportunity to buy good stocks when it was cheap.

The third is more information from the company. The company has to provide more information and the investor should check it thoroughly. The information should be provided as a detailed prospectus.

It should contain past performance, assets, liabilities, financial status, risks, growth, plans and price per security. That would create transparency and also enable retail investors to make better decisions about their investments.

The fourth is building up massive momentum. When a company floats their IPO it attracts huge media exposure, PR and a large volume of big and other investors. This creates a massive momentum making it more attractive.

Being a fresh stock with no history, it is the fresh ground that attracts more investors. That is why an IPO has greater performance than other stocks.

Time is also crucial in this matter, as one could miss out on the company, that would be churning out profit later. So always keep an eye on under-the-radar and undervalued companies going in for an IPO.

At the same time, do not go in for the frenzy. Check the details, get expert help who knows how it would go, get their guidance and invest wisely.

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