Blue Chip Stocks By Anoki Ah Sing

What Does Blue-Chip Stock Mean? Stock of a well-established and financially sound company that has demonstrated its ability to pay dividends in both good and bad times. These companies often reside at the core of American business and boast pasts as colorful as any novel (the phrase blue chip, for example, comes from poker where the highest and most valuable playing chip which is blue).

What type of investor would most likely use this fund? Despite their reputation as boring, stodgy and perhaps even a little outdated, blue chip stocks have long reigned supreme in the portfolio of retirees, non-profit foundations and conservative individuals.blue chip stocks

How do you make money on this type of investment? The moderate debt levels and excellent credit ratings allow companies to borrow money at a lower cost than their competitors. Excellent market place reputation also results in higher sales; a consumer is more likely to purchase a brand with which he is familiar despite a slightly higher price tag. There are several ways to invest in blue chip stocks. An investor can get shares directly through a broker, a direct stock purchase plan or a dividend reinvestment plan. He can also purchase a mutual fund that specializes in blue chip stocks.brokerdirect stock purchase plandividend reinvestment plan

What is the risk level for this type of investment? Low risk, because these are companies many people trust to stay in the black. However in the recent economy, these companies blue chip stocks are basically worthless, which would make them high risk in a way.

Bibliography