The Role Of Unlisted Shares In Diversifying The Portfolio

Unlisted shares come with massive gains and portfolio growth opportunities since the unlisted shares market has been rapidly blooming for the last few years and has almost quadrupled. If you want to build a strong and stable portfolio in the stock world, investing in unlisted shares would be the most direct path for you. Unlisted or pre-IPO shares are known for their extreme money-making benefits in short tenure. Abhishek Chaturvedi of the Ultimate Wealthowl said, “Investor portfolios in the unlisted space fetched up to 25-35 per cent return for 2019. About half the stocks traded in the unlisted market ended the year in the green.” So, if you want to take your investing one step forward, buy unlisted shares and reap maximum gains.

In this blog, we will tell you the in and out of the term’ Portfolio Diversification’, and then we will walk you through how unlisted shares play a significant role in diversifying your investor’s portfolio.

Understanding The Term “Diversification” In Investing

A diverse portfolio is an act of defence in investing to tackle the damages caused by an immediate drop caused in the share market. Let’s say your investment portfolio only has airline shares, and due to any bad news, like an indefinite pilot strike, the airline shares price faces an ultimate drop. In such a scenario, you will face significant investment damages and diversifying your investment portfolio will help you tackle such damages. 

Now taking the same example, say you had part shares in railroad or railway stocks, so when the airline’s share price drops, only a part of your portfolio will be affected by it, and you stay in a relatively stable position. This strategy of enacting a defensive position instead of investing whole capital in a single sector or company is the heart of diversification.

Importance Of Portfolio Diversification

In the year 2022 alone, more than 20 penny stocks have delivered up to 2,770 percent return and defied gravity. So, if you want to diversify your portfolio and gain maximum benefits, buy the best unlisted shares to invest in. A diverse investment portfolio has more tremendous advantages than you would have imagined. To filter the maximum risks, these are some ways to diversify your investment portfolio. 

Ensure safety 

Diversifying your investment portfolio is directly related to playing safe, meaning you are not running to make a vast interest return but want to invest your money safely. By trading in the best-unlisted shares in comparatively safer stocks like bonds, gold and FDs, you can ensure your capital is always preserved and may help with great capital gains in case of interest cut rate by the RBI. 

Subject to short-term volatility with market-linked investments

You would always want to avoid volatile stocks while diversifying your portfolio since the motive is to stay safe. The market-linked investments such as international and domestic equity are subject to short-term volatility but have a higher chance of gaining considerable returns in the long run. The motive of market-linked investments is to hedge against inflation and capital appreciation.

Open alternative sectors to invest in and explore

The best unlisted shares to invest in the alternative investment sectors are a new way to diversify the investment portfolio. Alternative investments, such as private and real estate, do not have  strong correlation with other asset classes. Due to their growing credibility in the sector because of the revised regulatory framework, they have provided lucrative opportunities for investors.

Can be the perfect retirement plan

You can invest part of your capital in retirement plans like pension & provident funds and diversify your portfolio while securing your future. Since Indian investors do not have enough security benefits after retirement, especially in the private sector, buying the best unlisted shares to invest in retirement plans will kill two birds with one stone. It will help you diversify your investment portfolio and keep your capital safe while securing your future. Moreover, the provident funds come with the additional benefit of tax-exempt returns in the debt category and offer high returns. 

Provide tax-saving benefits

There are various ways to buy the best unlisted shares to invest in and gain tax-saving benefits, such as investing in insurance, equity-linked saving schemes and provident funds. If you want to invest in order to reduce tax outflow, these tax saving schemes are a great way to ensure your invested capital is not drowning in the volatile stock exchange market while being tax efficient. In addition, these unlisted shares help in increasing your surplus income and thus improve the ability to invest.

How Unlisted Shares Help In Diversifying A Portfolio

In the past, the best unlisted shares to invest in have been a topic of debate, but their recent growth and benefits have halted all doubts. One of the primary reasons you should buy unlisted shares to diversify your investment portfolio is the institutionalisation of the assets that lead to unprecedented growth. Some other reasons you should be thinking about investing in unlisted shares are they provide effective avenues of diversification; they offer stability in longer-term returns. Additionally, unlisted shares are a source of near real-time portfolio liquidity; all these reasons together act as fodder to break the traditional scepticism about the best unlisted shares to invest in.
If you are willing to diversify your portfolio and want to invest in unlisted shares, Stockify is the right place to start. We are an online trading platform that helps you buy and sell unlisted shares to interested investors. So what are you waiting for? Buy the best unlisted shares to invest in now!

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Investing in unlisted shares means defending your capital against volatile shares and stock inflation

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Piyush Jhunjhunwala
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Rahul Khatuwala
Ex. Wipro & Finaco Founder
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