Why Do People Invest in Blue Chip Shares?

There are some traders for whom blue chip shares are a rather boring, fall-back option. However, there are in fact many reasons why some people choose to invest in these types of shares. For those not in the know, blue chip shares are shares in big, well-established and highly successful companies which usually have a market capitalisation which reaches billions of dollars or pounds. Blue chip companies are listed on one of the major indices, for instance the Dow Jones or the FTSE.

For conservative individuals, retired persons and non-profit foundations, blue chip shares appeal. This is because, over many years, these companies are likely to make money. They are established companies and as such can use their experience to ensure the company continues to be a success in the future. Ultimately, profit is what attracts such people and organisations to blue chip shares. Making the right choices and waiting patiently sometimes pays off for people who choose to invest in blue chip companies.

This is not to say that investing in blue chip shares is guaranteed to make a person money. Such a presumption would be a risky one to have. There are in fact many examples of times when well-respected and trusted blue chip companies have crumbled under intense pressure – take the Lehman Brothers in the 2008 recession, for example. As such, it is worth spreading one’s risks out across a number of blue chip shares companies, rather than purchasing shares in one alone.

It would also be sensible to consider all your trading options carefully. For instance, if you would like to make a quick profit, you may be better off thinking about trading CFDs, spread betting or Forex trading, for instance. Equally, you may prefer to buy shares in up-and-coming companies rather than buying blue chip shares. Ultimately, it is a decision that only you can make.

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