Why invest in IPOs? How much money do I need to start investing in IPOs?

let's get the basics out of the way...

I get a lot of people asking me: why invest in IPOs? How can I get started investing with just $500 or $1,000? Aren’t IPOs for people who are already rich?

So first things first, no you absolutely don't need to be rich to buy IPO stocks. That’s why they’re called initial public offerings! The shares are available to the public and all you need is enough money to buy at least 1 share of whichever company is being offered! Many companies go public at valuations of under $10-20 a share, so with just a couple hundred dollars you could buy upwards of 50 or even 100 shares depending on the company.

So why invest in IPOs vs. other assets such as mutual funds, or stocks of more established companies? Personally, I like to invest in IPOs for one simple reason.

Time!

When you buy an IPO on the day it goes public or in the first couple days thereafter, you are beating 99% of your fellow investors to the punch! From there, all you need is time and patience. You see, waiting for confirmation from fellow investors or the media that a company is a “good investment” tends to be an expensive mistake. Why is that? Because by the time the market has reached a consensus, it’s too late to invest at a low share price because everyone else is already buying in!

Sure, Google and other large, established companies are fine investments for the purpose of long-term savings, but the share price of Google is already over $1,500! So if you’re trying to get rich on Google stock, sorry that ship has sailed! In finance, the largest rewards go to those who are right when everyone else think’s they’re wrong. I still remember the Amazon naysayers from my childhood in the early 2000’s: “haha, that clown Bezos and his online bookstore that doesn’t even turn a profit! How is that company worth a billion?” Jokes on you guys, more like $1.5 trillion…

So that’s why I buy-and-hold IPOs. By investing in new companies well before they’ve gained the attention of the masses, IPOs give you incredible opportunity to hit home-run investments. Imagine buying Apple stock in 1997. Or Netflix in 2005. That’s what we’re trying to do here.