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SHARE MARKET | STOCK MARKET | IPO & FPO | INTRODUCTION & DIFFERENCES

SHARE MARKET | STOCK MARKET | IPO & FPO | INTRODUCTION & DIFFERENCES  


Welcome back !! To Those Who Are Revisiting My Blog & Welcome to those who are new !!

Okay so, If you are someone interested in Share & Stock Market then FPO & IPO should not be a new word for you. But if incase you don't have any clue of what these are don't worry because I will be going through basics in this blog regarding FPO & IPO.

But you can check our previous blog post "All you need to know about Share Market/ Stock Market" if you a complete beginner and then come back to this article afterward. Now back to the topic,

What is FPO ?? What is IPO ??

Well let's start with the full forms. IPO stands for "Initial Public Offering" & FPO stands for "Follow Up Public Offering".

So what are these ??

After SEBON (Security Board Of Nepal) approves Company's request to let general public buy shares. Issue Manager issues a notice or announces a notice to general public that they can now buy shares of that Company. And that is what we call IPO or Initial Public Offering.

Some percentage of Company Share's are reserved for the Company's Employees. Remaining percentage is left for the general public to apply.

Now talking about the FPO. FPO or Follow Up Public Offering is kind of second IPO. If a company have already announced IPO once and then if they wanted to sell shares for the second or third time & so on, then this time. It is regarded as FPO. Confused ??? Don't worry out :)

Keep reading...

So what are differences between IPO & FPO

- If the company announces shares for the first time then that is considered as IPO(Initial Public Offering) & If the same company is announcing shares for anytime other than first, it is regarded as FPO (Follow Up Public Offering)

Which one is cheaper ??

Comparatively IPO is cheaper than FPO

Which one is safer ??

- Share Market is not something that can be predicted easily. But generally speaking, FPO is generally more safer in comparison with IPO.

Reason behind ?? 

Since FPO is the re-opening of share, we have more knowledge about how the Company performed in earlier phases. So looking that we can decide whether to buy that company's share or not. Whereas, IPO is the first time company is selling out shares so we cannot accurately predict how the company will perform.

So their is more risk with IPO than the FPO. But anyway if someone has a great financial observation and is more experienced then in that case both are pretty safe.

Which is more profitable ??

As you might have heard before. No risk no gain.

Although IPO has potential risk in comparison to FPO. It's kind of "High Risk High Reward" thing. So yes, generally IPOs are more profitable than the FPO.

Which one should you start with?

I would say, go with the IPO. Do your analysis, talk to people in this field and if all seems Okay. Go on, apply for the IPO.

Suggestions ??

So below are few suggestion that I have for the newbies. Also if you have been working on this field for a while now but, have not consider applying these suggestion. Do give these a try:

1. Do not get into this based on what you hear. Do your own research and talk to people who have some experience in the field.

2. Never start big if you are a newbie: I know you might be too excited when it's your first buying shares. But if you try buying more units without having proper experiences. Their is a high possibility that you are going get screwed. And you might even loose money.

3. Learn to have patience, before making any big moves make sure you have enough experience.

4. Never give in to your emotions. Greed, fear of loosing money, desire to make quick money are few emotional hurdles people carry with themselves knowingly - unknowingly. And sooner or later these start acting against us. So, be wise use your brain while making any sorts of transactions(be buying or selling shares) and keep your emotions in check.

5. Never get in for short term. Share market sure can make you millions but for that you need to always be ready to play the long term game. Hopes of getting profit quickly & hopes of making more money is less amount time will get you screwed.

6. Never put all your eggs in the same basket. Have multiple baskets or shares so that even if one is bearing loss the others will be able to compensate your loss. But if you bought share of only one company and invested all your money on buying it. Then if incase that company did not do well as you might have expected then share values of that company might drop rapidly and you might have to bear massive loss.

7. Never put all your money for investment. This is one of the big mistake most people often tend to make. They just invest all the money they have. And end up with no cash.  Share Market sure is a profitable business but have some amount kept for your other work. Do not go crazy and invest all you've got. 

8. Never regard Share as your primary source of income: A broker sure can make it a primary source of income. But if you are an investor, it should never be the primary source of your income.

9. Have a job or business of other thing to provide for your needs. Stock Market market should always be your secondary source of your income.

But my personnel suggestion would be. Never make shares a secondary source of your income too. Use it's profit as your employee. Rather than spending what you earned through shares use it to buy more shares. Aim for the financial independence so that someday neither you nor any member of your family will have to work for money any longer.

Well this much for today. Hope this article was informative and hope this added some value to your financial literacy. Will see you on some other blog post.

 Stay safe !! Stay Wealthy !!

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