Should you read the prospectus before buying shares?

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Should you read the prospectus before buying shares?

Companies sell shares as a way of raising capital.  We call this a float or an initial public offering.

Before deciding if you wish to buy shares, you should read the prospectus.

The prospectus must contain key information about the company and must be lodged with ASIC.

Some of the information you would expect to find in the prospectus is as follows:

  • How many shares are for sale?
  • How to apply to buy them
  • Information on the company’s operations and financial position
  • Any risks associated with the offer

If after reading the prospectus you have doubts about the company’s prospects, make sure you get professional advice before investing.

Buying shares in a company without reading the prospectus is like buying a car without opening the hood.

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