Investing in blue chip stocks are recommended not just because of the capital appreciation, but also the attractive dividends, depending on the company. In the example above, Axiata is a well-known and reputable blue chip company.
Blue chip companies refer to reputable and financially sound companies, selling high-quality, and widely accepted products and services. These companies are known to weather downturns and operate profitably in the face of adverse economic conditions, which helps to contribute to their long record of stable and reliable growth.
However, if you’re risk averse and not well informed, stocks should not be used as a short-term investment in order to make a big profit. This action is not investing, but pure gambling. There may be times in which stocks have put a record on short-term growth, but these occurrences are very rare.
Making short-term transactions with stocks can lead to high cost of investment due to the various brokerage and transaction fees. Depending on your investment amount, these fees can add up to a significant amount.
As Warren Buffett once said, “If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes.”
No matter which investment vehicle you pick, it should have a long-term flavour. That way, you don’t get eaten alive by trading fees on a relatively small amount of money invested, and there can potentially be higher return on your money.
For most people who are struggling to save up on some money to invest, remember, it can always be done over time. You can always top up your investment in various investment vehicles as and when you have saved up some investment fund. If you keep at it over time you will gradually build up a pretty secure and diverse investment portfolio. It’s always good to start early!
Dec-22-2017 11:08:01 AM