What Are Blue Chips?

Are you afraid of the stock market because the risk is very high and you don't want to lose all your money in it? What if I tell you that there are stocks that you can invest to and expect with greater probability that these stocks will earn you money over the years? Yes, these are what we call 'Blue Chips' stocks. [panel-image src="http://moneygizmo.net/wp-content/uploads/2013/02/what-are-blue-chips.jpg" caption="What are Blue Chips?"] [impt text="What are Blue Chips?"] Blue Chips are stocks of well-established companies with strong track records. When we refer to blue chips they are often known companies in the country. They are somewhat treated as icons in their respective industries. In terms of financial resources, blue chip companies are known to have large amount of capital. They are known to be profitable, pays regular dividends to its stock holders, and have a good rating on their debts.[divider] [impt text="How's the Performance of Blue Chips?"] Let's take one blue chip stock for example. Jollibee Foods Corporation (JFC) has been a great performer in the Philippine Stock Market during the last decade. As you can see in the chart below, the direction of its price is generally upward. JFC is the parent of Jollibee, the country's leading fast-food chain brand. And if you would add all Chowking, Greenwich Pizza, Red Ribbon, Mang Inasal and Burger King stores it will total to 2,510 food-chains worldwide and a total sales of 82.1 billion pesos (around 2 billion US Dollars).[divider] [impt text="Is it Safe to Invest in a Blue Chips Stocks?"] All stock market investments has no guarantee of earning you money. Stocks investment is always involved with high risks. The market can go very high but sometimes it can go crashing down. If you plan to do short-term investment only, then I might say that blue chip stocks are not really the best choice. But, is it safe to invest in blue chips? Well, if you compare them to non-blue chip companies, then I will say Yes since they have already proven to be strong over the years so we don't expect them to be gone any time soon.[divider] [impt text="What Companies are considered as Blue Chips in the Philippines?"] Some companies that are considered as 'blue chips' are Jollibee Foods Corporation (JFC), Philippine Long Distance Company (TEL:PM), Metropolitan Bank and Trust (MBT), Ayala Land Inc., (INC) and Bank of the Philippine Island (BPI:PM). [panel-image src="http://moneygizmo.net/wp-content/uploads/2013/02/Jollibee-Foods-Corporation-stock-performance.jpg" caption="Jollibee Foods Corporation is one of the Blue Chips stocks in the Philippines"] So in summary, Blue Chip companies are considered good investments as they already have proven track record in terms of performance, they have a big amount of capital, they pay dividends to their shareholders and compared to other volatile stocks in the market, it is safer to invest in blue chips. But remember, these stocks are ideal for long-term investments. Happy Investing!

Mark Hugh Neri

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