With many benefits around investing in unlisted stocks, it is no wonder that they are becoming more and more popular.
Suppose you have ever thought about getting started with investing but hesitated because of the perceived complexities and risks involved (and not to mention the heavy fees and commissions) with listed stocks. In that case, unlisted stocks might be an option worth considering. Here are some of the benefits for one as an investor.
1. Risk: One can rest easy knowing that whatever happens, their investment is safe from the risk of manipulation or devaluation due to market forces or financial irregularities – so long as they invest in a reputable company. Investing in an unlisted stock means there is less public information on which to base their investment decisions. The unlisted stock prices are also low compared to listed, so one can invest more and gain more profit.
2. Liquidity: One of the most incredible benefits one get from investing in unlisted stocks is liquidity – the ability to quickly cash out of an investment and get back their original capital (or at least a large portion of it). With listed stocks, there are numerous restrictions on when and how one can cash out. For example, if thy want to sell some shares, even if offered below market rate, there may be a settlement period of up to 3 business days. But with unlisted stocks, cashing out is as simple as giving their broker a call or sending them an email requesting that they sell their shares for them! One can then receive funds into their bank account within 24 hours.
3. No Brokerage Fee: Since there are no listing fees to be paid, no brokerage fee is charged. One can save a lot of money by not paying a broker’s commission and other costs associated with trading listed stocks.
4. No Minimum Investment: With listed stocks, there could be a minimum amount they need to invest before trading on the stock exchange. Some exchanges may require a deposit of thousands or tens of thousands of dollars before they can begin trading listed stocks – but not unlisted stocks! This allows more people starting out with small investments to get into the game at minimal cost.
5. Less Paperwork Involved: Compared to listed, the paperwork involved in investing in unlisted stocks is less. The requirements tend to be much easier, and oftentimes there are no requirements at all.
6. Less Public Information: Since listed stocks are traded on an open exchange where almost anyone can access information about the stock, there is more public information available than with unlisted stocks where only certain investors or organizations have access to that type of information – which in turn makes the buying and selling process less competitive compared to listed stocks.
7. Limited Regulatory Requirements: Every investment indeed comes with its own set of risks (and usually regulations), but when it comes to investing in unlisted stocks, the regulatory framework in place allows one to invest with a higher degree of certainty in what they are buying. Regulations for listed stocks are put in place to ensure that there is proper disclosure of information that can help investors make informed decisions – but if they are not able to access that information, then the purpose of those regulations is lost.
These were some mind-blowing advantages of an unlisted stock exchange.