Unlisted share is those financial securities that belong to a company that is not listed in any stock exchange market and thus, can’t trade publicly on the stock market. But the investors can buy unlisted shares online. In recent years, unlisted shares have gained much popularity among investors due to the following benefits offered by them.
- Offering a high rate of return: Unlisted share market is quite unstable. In simple words, because of general liquidity, the price of the unlisted shares increases and decreases with time. Although it sometimes is a disadvantage for some investors, when it comes to experience investors they convert this particular disadvantage into an advantage. It is beneficial to buy the unlisted shares at a reduced price and wait for the right time when the price of the same shares rises to sell the shares in the stock market enabling the investors to earn a higher rate of returns.
- High growth investments: The companies offering unlisted shares to the investors are usually small in size and some are even start-ups. There is much time for these firms to reach the stage when they can get their shares listed in the registered stock exchange in the market and thus, go to the public for availing the funds required to fulfill their business’s capital requirements. As a result, investors by investing in these companies when they are small and being invested through the growth of these companies when they list on the equity markets can procure high returns because of the small base effect.
- Offering peace of mind: In comparison to the prices of listed shares in the equity market, the prices of unlisted shares in the unlisted stock market are quite stable. There is no need to worry for the investors about the falling of the price of the unlisted shares in which the investment is made. In the future, they will get the same returns as calculated before purchasing the unlisted shares.
- Dematerialization of the shares: just like listed shares, unlisted shares when purchased are also transferred into the Demat account of the investors. There is no need for the investors to store the unlisted shares in the physical form which is prone to damage. Investors also check the status of the unlisted shares bought by them through the depository participant, where they are available at the face value.
- Diversification of the risk: It is a well-known fact for the investors trading in the mare market that more diversified investments lead to reduced risks of the investment portfolio. Unlisted shares are modestly volatile and the addition of these shares in the investment portfolio already having highly volatile shares will help to diversify the risk of investments.
Bottom Line
Unlisted markets are a pure game of supply and demand enabling the fixation of the fair share price. Any investor thinking to buy unlisted shares must go through the unlisted share list to know about the companies offering unlisted shares, lot size, and the price of the shares offered.
