Investing in IPOs, buying smartphones: Top personal finance stories

Our newsletter this week tells readers about the importance of researching a company and what to look for in luxury headphones

A recent Securities & Exchange Board of India study, based on data from 144 initial public offerings (IPOs) between April 2021 and December 2023, found that individual investors sold over 50 per cent of their IPO shares within a week of listing and 70 per cent within a year. In this week’s lead story, Sanjay Kumar Singh and Karthik Jerome examine the risks of a short-term approach to IPO investing, the additional risks IPOs carry compared to already-listed equities, and the importance of thorough due diligence before investing in IPOs.

The second article, by Namrata Kohli, discusses the rising popularity of premium headphones and earphones in India, especially among young consumers. It emphasises the importance of selecting quality audio devices for better sound and comfort and warns about the risks of hearing damage from prolonged use.

With equities trading at premium valuations, many investors are wary of putting in more money into the markets. Such investors may consider investing in a balanced advantage fund, many of which have reduced their equity allocation considerably. If you are looking for a fund from this category, go through Morningstar’s review of HDFC Balanced Advantage Fund, the largest fund within this category.

The festival season is around the corner. With car sales slowing down, it is possible that manufacturers will come up with discounts and other types of offers. If you are looking to take a car loan, look up Paisabazaar.com’s table on the interest rates offered by the leading lenders.

NUMBER OF THE WEEK

Rs 250 micro-SIP that Sebi plans to introduce

The Securities and Exchange Board of India (Sebi) announced that it might soon see a Rs 250 monthly systematic investment plan (SIP). The initiative is being worked upon in collaboration with the mutual fund industry. Aditya Birla Sun Life Mutual Fund has reportedly taken the lead in developing the Rs. 250 SIP. Allowing people to invest as little as Rs. 250 per month will allow a larger section of the population to participate in wealth creation via mutual funds.

When investing via SIPs, investors need to keep a few things in mind. First, do not stop an SIP even if the market tanks. It is when the markets correct, and mutual fund units are available at a low price, that SIP works best. By providing the benefit of rupee cost averaging, it augments the returns of investors.

Another point to keep in mind is that while SIP reduces the impact of volatility, it does not remove the risk of equity investing entirely. If the market tanks steeply, it is possible even for SIP investors to register a loss. In equity funds especially, SIPs should be run for five years or more.