Unlisted Shares Vs Listed Shares: What Is More Profitable?

Listed shares are a fair deed, but unlisted share buy can expose you to more profits. Still, opinions on both listed and unlisted shares are two-fold.

In the eyes of risk-averse investors, listed shares are more secure. On the other hand, unlisted shares build great chances to fetch superior returns in no time.

But it's just a quick glimpse of both share types. There's a lot to cover in these profitable areas of the market. So read on. Here’s a brief contrast between listed and unlisted shares.  

Take a look -

What are Listed Shares?

Each company with its shares listed on the stock exchange (e.g., NSE or BSE) is titled the listed shares. These shares are available for investment to anybody in the market. In short, these shares are tradable on the public market.

What are Unlisted Shares?

Unlisted shares, on the other hand, are the shares of the company that are not tradable publically in the market. It is because these shares aren't registered with the stock exchange. Still, investors can buy sell unlisted shares via intermediaries or trusted sources online.

Comparing Listed and Unlisted Shares

No wonder the difference between listed and unlisted shares is apparent. So let's dive deep into this contrast to grab more information on listed and unlisted shares.  

1. Listed shares Vs Unlisted Shares: Valuation

Demand and supply are the two segments of the market that dictate the price of listed shares. The more demand a share attracts for itself at a particular price, the higher the chances are the value of that listed share will mount up.  

On the flip side, being not publicly listed in the market, unlisted shares value comes from Fair Market Value (FMV) method. Only an underwriter or intermediary can give a superior value to the unlisted shares. If the company grows, the valuation of the company also expands.

2. Listed shares Vs Unlisted Shares: Liquidity

Listed shares are more liquid than unlisted shares because they are traded in high volume publically in the financial market. It happens as these shares may have more investors to back the prices, making them more liquid assets to invest in.

Unlisted shares, on the other hand, have only a few investors. Thus they are less liquid. Liquid shares can benefit short-term investors but become risky in the long run. Since unlisted shares are less liquid, they are optimal for the long-term investment horizon.  

3. Listed shares Vs Unlisted Shares: Buying of Shares

Unlisted shares buy can be done from intermediaries or investment banks, but make sure they are reliable. The purchasing process of listed shares is simple. You can visit any online stockbroker and buy the shares.

4. Listed shares Vs Unlisted Shares: Opportunity Size

Unlisted shares can be more profitable if the investor identifies a well-paid opportunity early. To simply put, one can buy the unlisted shares of a company at a great price.

In future, if the company grows more prominent and is publically available for all via stock exchange, it adds more benefit to the older investors. However, investments in unlisted shares are termed as a risky subject, but special agencies that deal in unlisted shares can guide you better for the best pick.