Investing in Unlisted Shares: An Alternative Investment Strategy

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Is one a beginner at investing? Or maybe a semi-professional who wants to try something new? Either way, buying unlisted shares may be an excellent choice. It is targeted at those who have some experience with the stock market and want to test their skills or take it to the next level.

  1. Invest in multi-billion companies

As mentioned above, unlisted shares are not found in one’s normal list of stocks because they are usually small companies yet to go public through an initial public offering. They can either buy shares straight from the company or purchase them from another shareholder at an unlisted share price than when bought after listing. However, they must note that when they buy unlisted shares, the share value is not as stable as those that are listed.

  1. Inexpensive to invest

When they buy unlisted shares from another shareholder, they are paying only for the price of the share. Since most of these companies are in their infancy stages, they don’t have much profit/revenue yet so naturally, the share is inexpensive when compared with big established corporations out there. However, if they want to invest in a company right when it is starting, this can be expensive because usually, they don’t have any existing revenue/profit at all until after IPO where shareholders can sell their shares at more significant prices.

  1. No commissions or brokerage fees

This depends on who is selling their shares to one and how will they buy it. Usually, when they go to the registrar’s office, they can directly buy them without having to pay any brokerage fees. However, if they are doing it through another shareholder, this is where there can be some fees involved so make sure to check with them beforehand.

  1. No minimum value is needed

This is a good thing for those who have a smaller investment fund and want to start from somewhere with a small amount of money in order not to lose much in case their decision does not work out in the end. There might be a minimum quota that must be met for a company to list itself on a stock exchange but that depends on the company’s wishes and country’s laws regarding the issue of new shares.

  1. There is no need for a stockbroker

Since most of these unlisted companies do not have much revenue/profit and they are too small to be listed on the stock exchange, there is no need for a stockbroker. Therefore, one can directly contact the company regarding buying their shares as well as any information they wish to know about them. they may even contact them themselves instead of having to pay someone else to do it for them.

  1. Investing in young talent

Another reason why many people buy unlisted shares online is that they want to support new talent at its early stages so that maybe one day it will grow into something big. This means that their investment might help improve within the company or increase workers’ rights/wages for themselves and their families. Therefore, their investment might be used in a way they did not expect, and the company might become more successful than before thus giving them back more money in return.

There are many great reasons why one should invest in unlisted shares but at the same time, there is a need for caution because nothing is guaranteed when it comes to buying these shares from other shareholders.