Know What is Blue Chip Stock

Nowadays young people are getting interested in investing because it can be profitable in the long term. Of course, there are many choices of types of stocks that are offered and can be chosen. One of them is blue chip stocks which are known as the most profitable investments.
Don’t be tempted by the word profitable if you don’t understand it well. We will provide a more complete explanation of this stock so that you can choose a good investment.

What Are Blue Chip Stocks?

Do you know the game of poker? In this game there are red, white, and blue chips. The blue chip is the chip with the highest value. This is the origin of the naming of shares as blue chips by Oliver Gingold in 1924.
So what are blue chips? This is the most stable stock in various situations. Of course, this is the best choice because you don’t have to be afraid of losing when you own a lot of shares. Therefore, this capitalist stock is the most promising with other types of shares. For beginners, you can choose the type of stock to reduce risk.

Features of Blue Chip Stocks

Before deciding to invest, you must know what are the characteristics of blue chip stocks 2020. There are several indicators that make a stock called a blue chip, including the following.

Traded a lot

In the world of investment, stocks that are widely traded are called liquid. That is, a lot of investors who trade this stock. Therefore, stocks that fall into the blue chip category are listed as active stock exchanges.
On the stock exchange there is the term LQ45, which is an index that contains liquid stocks. But not all blue chips are LQ45. The difference between blue chip stocks and LQ45 is the origin of the company.
Not all that are included in the LQ45 index come from companies with high profits. It could be that the stock is just being traded but comes from a company with an average profit.

High Capitalist Value

Shares can as a blue chip if it comes from a large company with high capitalist value. The point is that when a company is sold in its entirety, it will be of high value. Not only that, the profit generated is more stable even in unfavorable circumstances.
In addition, this capitalist value can be seen from the number of shares sold on the stock market. If the profit of a company has reached 10 trillion, it can be categorized as a high capitalist company.
Companies like this can be an option when making investments. Because, there is very minimal risk of loss so there is no need to worry when there is a decline in stock prices. In a short time the stock will return to normal.

Coming from a Market Leader Company

Blue chips also come from companies that are market leaders for other similar companies. It could also be from a company that monopolizes the market so that it becomes a big company.
For example, shares of PT Telkom whose company services by many people. So even in unfavorable circumstances, profits still come in and are stable.

Being on the Stock Exchange for a Long Time

Another feature that you should pay attention to is the length of time the stock has been on the stock exchange. Actually, even though you have been on the stock market for a long time, it doesn’t mean you can become a blue chip. Of course, his income must continue to increase significantly and meet other criteria in order to be called a blue chip.

How to Buy Blue Chip Stocks

The way to buy blue chip stocks is the same as buying stocks in general. So, if you are interested in investing in this type of stock, you can immediately open a stock account at a trusted stock broker.
Previously make sure that the selected broker is a member of the IDX exchange. Do not be tempted by high profits without taking into account the quality of the broker. Then you can open a Customer Fund Account or RDN at the bank. To start buying and selling shares, you must deposit funds to RDN.

Blue chip stocks are really because it comes from a stable company. But before starting to invest, you should know better about the stock. This is to reduce losses due to fatal minor mistakes when investing.