
Howtotradestocks.org

What are blue chip stocks?

Blue chip stocks are stocks in well established companies, often companies that have been profitable and paying dividends for many years. These companies usually have a long history of stable earnings, excellent credit ratings and negligible liabilities.

Investing your money in blue chip stocks is probably about as safe as you can get when investing in the stock market. However, the returns are unlikely make your wallet or purse particularly heavy. Historically, the returns on blue chip stocks has been modest in the long term, but this is a trade off for relatively low risk stock investing.

I feel it is imperative that I emphasize the word relatively. Blue chip stocks are no way guaranteed and always have the risk of losing considerable value, no matter what your financial advisor/salesman at the bank may tell you.

Who are blue chip best suited to?

These stocks are often best suited to investors with a low tolerance for risk. Often older investors who have saved for their retirement and would like a better return than the risk free rate their bank is offering.

They may also be suitable investment vehicles for young investors who wish to growth their money over a long period of time with a relatively low level of risk.

They are unsuitable for investors seeking high returns on their money. Growth stocks may be a better option here.

How safe are the best blue chip stocks?

The best answer I can give to this question is, they are as safe as you can get with the stock market. There have been major stock market crashes where some blue chip stocks have lost a large portion of their value.

As recent as 2008 some of the major bank shares plummeted by as much as 90%. These stocks were considered low risk. An example is the well known and respected US Bank Fanny Mae. As you can see on google finance, their stock became almost worthless after the 2008 financial crisis.

It's important to fully understand that even the best stocks can potentially end up worthless. However, if you have a diverse portfolio of low risk stocks, the chances are that in the long run, you will come up nicely on top.

I don't wish to be too negative, but I would hate for you to not fully understand the risk you may be taking. I would hate for you to visit my site and leave without a full understanding of the risk factors.

Which is the best stock broker for blue chips?

If you are trading blue chips, you will probably want a broker that offers good support, cheap trading and good execution. Three brokers I have used and can recommend are Zecco, Tradeking and OptionsHouse.