How to Invest in Blue Chip Stock

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With so many stocks available to invest in, it's hard to know what's worth putting your money into. Obviously things like junk bonds are often very risky, but how do you find the most reliable stocks that are likely to be very solid investments? Well, the most stable and profitable companies are generally referred to as blue chip stocks, and if you're looking for a sound investment, blue chip is the way to go.

Things You'll Need

  • Money to invest
  • A basic understanding of stocks

Figure out how much you can afford to invest. Blue chip stocks are often more expensive than other stocks on a per-share basis, so you'll want to be able to invest a fair amount.

Look online to find a list of blue chip stocks you might be interested in. A good place to start is the Motley Fool's recommendation list which is linked below.

Select a particular stock that you might be interested in buying. A good rule of thumb when first investing in blue chip stocks is to invest in a company you've heard of. You want to pick a company so famous that is a household name, and one that you're familiar with.

Read up on your potential stock buy. Just because Coca-Cola is on someone's list and you've heard of it doesn't mean you should rush out and buy stock. Do some research online about past performance, dividend payments, and future projections.

Invest in your chosen stock if you like what you've turned up with your research. Generally speaking, if you've never invested in stocks before, you don't want to put too much in your very first investment.

Repeat the process. The stock market wasn't made for only investing in a single stock. Pick a few blue chip stocks to diversify your portfolio.

Tips & Warnings

  • Save a little money to invest in non-blue chip stocks; you never know what the next big winner will be.
  • Never invest more in the stock market than you can afford to lose.

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