The lure of making money always gets people’s heads wrapped around the investment market. Many want to enter the stock market, while others look for some great alternatives.
However, whether or not if the investment will fetch excellent returns is hard to tell because every asset has an unpredictable nature.
Debt could be a risk-free deal. Still, equity investment has always been a trending subject among investors. If you want to multiply your investment with some great figures, no surprise it is the equity of a company that can surely meet your all goals.
But it is worth noting that equity investment is also split into four categories- listed, unlisted, delisted and pre-IPO shares. Whether you should buy shares of unlisted companies or invest in delisted companies assuming it is something great.
Below we have differentiated each share type, so you make a well-informed decision, take a look –
1. Listed Shares
Listed shares are the financial instruments available to the public for investment via the stock exchange. Through any trusted broker, anybody from the market can buy these shares. Companies listed in BSE, NSE etc., are the best suitable example for the listed shares.
All these companies enter the market adhering to some terms and conditions of listing in the stock exchange. Exchanges well classify these requirements. After that, a minimum share price is given to a single share of a company. Prices of listed shares are liquid and move in zig-zag patterns.
2. Unlisted Shares
On the flip side of listed shares, you see unlisted shares. You buy shares of unlisted companies that are either yet to be listed in stock exchange via IPOs. Or they are just a startup or a growing company collecting more funds against their equity.
Since these companies aren’t public, buying and selling in these shares takes place through a private stockbroker, OTC, or investment bank. These parties also determine the price of unlisted shares. But unlike listed shares, you don’t see prices of unlisted shares publically. Also, the Unlisted Stock price is not liquid.
3. Pre-IPO Shares
Every company or business organization aims to grow bigger and get itself list on Stock Exchange. It helps them fulfil their funding goals direct from the public. But it happens via a systematic approach. Such as, before a company goes public and gets its name listed in the stock exchange, it announces its IPO (Initial Public Offering).
Similarly, it let people make an initial investment in the company’s shares. But in most events, companies arrange a Pre-IPO investment option. They do this with an aim to provide people with an Exit option before the company officially announce its IPO. Companies make this option available to investors with the help of IPO shares brokers or intermediaries.
4. Delisted Shares
Those shares which were officially listed in the public market but delisted as they fail to comply with the terms and conditions of the stock exchange are the delisted shares.
Key Takeaways
Investment in unlisted, listed and pre-IPO shares can worth it. But make sure you don’t invest in delisted shares, assuming them as a startup or a growing company ‘to be listed’ in the stock market.
