If you are new to facing the stock market scenario, chances are you do not know much about what other people are calling blue chip stocks. But with the turn of the century, it has surfaced as a part of the stock market that is more dependable and stable to buy and sell.

They are considered very valuable stocks and even preferred option when it comes down to making investments. Also, they hold a high position when it comes to stock status on the market.

What are Blue Chip Stocks?

This term refers to stocks that are issued by blue chip companies, simply put. These blue chip companies are those that own some of the largest amounts of stock and dominate the stock exchange market.

They are some of the oldest and most experienced out of all the companies on the market and most likely to make sure business profits for their buyers. They also tend to have strong management skills that help them determine the direction that the entire stock market might turn.

These blue chip investments come with industrial prominence and high esteem and usually have the ability to influence legislation, stock trends, and other factors of business that will suit them. Their category also includes other companies such as those that have higher probabilities of making advancements in their won field or industry, and face off with strong competition. They also come with high assurances of payoffs to their investors for years to come.

Where It Came From

The first time this term turned out was around the 1920s to describe high-quality stocks. It is believed to be started by Oliver Gingold, a Dow Jones company employee at the time. He came up with the term while observing shares that were being traded at about two hundred and above.

He came up with the term, referring to real blue chips from the gambling game of poker, which carries high value in the game. The notoriety of this term in the stock market stuck, and now it is used to refer to high-quality shares in the stock market by high-value companies who hold substantial capital.

What It Means For You

Investing in blue chip stocks will result in a higher probability of growth in the value of your stocks. They originate from high-value companies as these large companies have had success in sustaining steady growth for a long time. Hence, you get to hitch yourself onto that growth cart for the ride.  

Blue chip stocks also give optimum assurance in returns for their shareholders. This is because there is a tracked quarterly in the form of dividend returns. This is because these stocks originate from companies that are already established and giving returns for years.

With the blue chips coming from these assured companies, you can be sure that they take pride in clearing any and all debts to their clients and shareholders as quickly as possible. This makes their stocks even more dependable, and their value remains of sustainable value on the market. Because of this, there is a low level of risks that come with investing in blue chip stocks. 

If you are looking towards achieving long-term, sustainable investment goals, blue chips stocks ensure you all the way. Their high market value results in seven-year investment terms that will help you. In some countries, long-term blue chip stocks also mean a reduction in real-time tax reductions. 

See Also: 10 New Investing Apps You Should Check Out

Why You Should Invest In It

Blue chip stocks come from companies that have their hands in every possible stock basket out there with potential revenue generation. This means that investing in their blue chip stocks have the added advantage of providing you with mixed profits that come from a network of sources within these stocks.

This will help to diversify your stock portfolio, which can result in an increase in profit margins with a low level of risks involved in the entire process.

Due to the good reputation that blue chip stocks have in the stock market, they have clean, clear-cut credits that aid in enhancing its value, making it attractive assets to own to both buyers and sellers. This means that their liquid value is always backed with a line of assurance of constant flow in the cycle of cash flow values.

How to Start Invest 

Before you dive into the entire process of purchasing blue chip stocks, take the time to step back and look for a diverse pool of advice and direction from experts who can give you a more informed say-so in the matter.

It will be wise for you to talk to your investment consultant in addition to doing personal research on which area of the stock market is doing well and which companies are leading among the pack. This way, you will have the capacity to make informed judgments and business-related decisions.

You can start by making a personal inquiry into the latest updates and news on the stock market that will be published across the multimedia board that deals with the subject. Make an assessment of the top tier companies and what changes they have made in the past few months and what kinds of results they have released since.

Also, look into the performance history of at least the past ten years to analyze growth and falls on their earnings and dividends. This will help in making a final analysis of whether the company looks stable enough to invest in.

Continue this process with a list of companies that have been working towards providing high-quality stocks over the past ten year period. 

You have the option of purchasing stocks yourself or through a second-person/company that can be hired to do the job for you. In the case that you want to opt for the latter, you have options on your hand: You can opt for a full-service broker, an online broker, or something called a discount broker.

Look into which option suits you best, depending on your earning goals and service needs. Soon after you start an account after providing all the necessary personal information, you can finally make a deposit and then decide on an order to buy stocks and the number of shares you desire. 

All the information given above should be more than enough for any beginner to start their journey into the blue chip market and start making proper evaluations on shares on the stock market.

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