What are Blue Chips?

August 20, 2008 · Filed Under money saving ideas

Written by: Christine from Spotya!

The more and more I’m researching about investing money and about stocks, the more and more I’m seeing the term “blue chip stocks”.

What are they?

Wikipedia defines blue chip stocks as “stocks of a well-established company having stable earnings and no extensive liabilities….Most blue chip stocks pay regular dividends, even when business is faring worse than usual.”

It’s those big name companies that consumers have held strong to buying their product regardless of how the economy is. Look in your refrigerator, in your shower at the products you’re using and have used all your life. It’s the companies that service you and have been servicing you. Proctor and Gamble, Coca Cola, Pepsi, General Electric, Nike, Johnson & Johnson, McDonald’s, etc.

MSN money has their top list of seven large companies that are safe in this slow economy.

Wells Fargo
PepsiCo
Schlumberger
Qualcomm
UnitedHealth Group
United Technologies
3M

That was in 2007, now there’s a good current article about 5 Blue Chip Stocks on sale. And guess what? None of those 7 listed companies above are on this 2008 list. That’s the thing about stocks, there is a risk involved. But with research and advice, you can make an educated risk. The writer of this article, Andrew Sullivan of MSN Money summed it up well, “Blue-chip companies might not go up 25% for you each year, but they shouldn’t go down too much, either. If you can get into them at cheap prices (like now), you will greatly improve your prospective returns.”

Today Yahoo! Finance has an article about Warren Buffett’s Blue Chip Leading the Way in Quarter 3. He has some different companies on his holdings, only one was in MSN Money’s, UnitedHealth Group. What does it all mean? Who knows? It all depends on which book you’re reading and which articles you’re reading. They’re all different and ultimately you have the choice, so choose well. If you don’t feel equipped or educated, get educated or go to experts that can help you choose. There are tons of resources out there. If you do end up investing in these blue chip stocks, think about the investment as long-term, re-invest the dividends you receive and don’t sell them.

Also keep in mind a previous post of mine. Think about socially responsible investing. Think about our earth’s future as well as your own.

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