1. Is it safer to invest in shares through IPOs?

Not at all. In fact it is riskier to invest through IPOs. IPOs are priced by professionals to get the best price possible for the promoter of a company. So the odds are against the investor and works in favor of the professional. So chances of getting a good price is almost NIL. Of course nearer to a downturn the shares could be conservatively priced and aggressively priced when the market is booming. Normally shares are issued in a up market, and hence priced against the small investor.

 2. Why do subsidiaries of foreign companies quote at a higher price?

 An MNC like Colgate, Monsanto, HuL, all of them get a higher price earning ratio and they grow well too. Hence these shares are quoted at a higher price. They have a long track record of rising income and dividends – so existing shareholders do not sell and new investors feel like buying more of them…so the demand is far greater than the supply, hence the price rise…

3. Are there any advantages of investing in government companies

No. There are no advantages investing in Government companies. Many of them are quoting below their issue price – thus breaking 2 myths – of investing in an IPO is a good thing and that investing in a government company ensures that you make lots of money.

You make good money in a well managed company and you lose money in a badly managed company. ownership does not matter.

4. Is there any guarantee that I will always get dividends in the good Tata Companies

Again no guarantees. Tatas are a good group and is normally well managed. However if you see their performance in financial services for example, their performance OVER THE YEARS has been pathetic. Again as I said in the earlier question, well managed companies will give you INFLATION beating returns.

5. I can spare about Rs 10k per month to invest – how should I go about investing in shares?

Do a SIP in a good fund….