If you have been thinking of investing your surplus funds in a profitable avenue, you must consider Blue Chip Mutual Funds. For those who are not aware of what a Blue Chip Fund investment is, let us keep you informed that blue chip funds area popular terminology in context of companies that are both, well established and financially stable. These companies have a credible track record and have proved themselves to be trustworthy.
These companies are either market leaders or have under them a substantial share of the market. Not only that, Blue Chip Companies are not as vulnerable to economic downturns as the rest, thus creating an extremely favorable perception in the minds of the potential investors. For those who are wondering, the term ‘Blue Chip’ is derived from the game of Poker, keep in mind that a blue chip has the highest value in equity investment.
As an investor, you must be looking to do a cost benefit analysis of the various instruments available to you before opting for the best equity funds. Here, we would like to point out that investing in a Blue Chip Fund is a safe and secure option. Definitely there are risks, no doubt, but the pros outweigh the cons.
Let us look at some benefits of a Blue Chip Investment.
- Stable Long Term Returns – One of the major factors that you must consider before you invest your funds in any instrument of the market is the earning stability. The upside of investing in a Blue Chip Fund is that there is a scope of stable earning. As already mentioned, these companies are not extremely vulnerable to market fluctuations. Hence, when the market is depressed, investing in these Blue Chip Equity Funds can prove to be beneficial. The management of these companies is experienced and forward-looking. At any given point of time, they are trained to handle difficult situations.
- Safe & Less Volatile – If you are new and this is your first time, investing in a Blue Chip Fund is the best and the safest option. Blue Chip Investment Companies are well-established market leaders who have successfully proven their credibility. If you are a new player, let these experienced players do the work for you. Yes, you might shy away from investing in these stocks as they are usually of a high price, but that is just the first card you are looking at. Because these companies are safe, sound and huge, they help you generate wealth like no other in the equity investment market.
- Perks of Dividends – One reason why people invest in stocks is to earn dividends. If a company is not in a position to ensure Return On Investment the purpose of holding that company’s share is defeated altogether. One advantage of investing in a Blue Chip Fund is that they offer dividends to their shareholders. So much so, that the investor can witness substantial income from their portfolio as well. Not only that, it can be seen as a cushion against inflation.
- Good Financial Performance – If steady income is the only thing that you are looking at, then Blue Chip Company Stock is the best option for you. These companies usually demonstrate consistent performance. With consistent performance comes a consistent Return On Investment. You will notice that most Blue Chip Investment Companies enjoy tremendous amount of confidence. Not only that, their debt to equity ratio is also low thus giving a boost to shareholders trust on it.
- Proven Efficiency – The Balance Sheet of a company gives away a lot about its decision making mentality and its capability of efficient performance. Checking the Balance Sheet gives a detailed insight into the asset, liabilities and earnings of the company. When it comes to a Blue Chip Investment Company, you will see that their Balance Sheet is pretty appealing. Not only that, their Income Statement is rock solid too. If you calculate the interest coverage ratio, return on equity, debt-equity ratio etc. you will see that it is extremely impressive and transparent. This is enough to prove that the Company knows what its doing and hence your blue chip funds are in safe hands.
However, before you start investing in aBlue Chip Fund, make sure you understand and find out certain things. It is always better to invest in a company that has a diverse portfolio. Not only that, go for a company that has proven its credibility in the toughest of times. Low debt and vulnerability are two more factors that you must consider, and do not forget to look at the Company’s future course of action. Lastly, choose a company that is friendly with their stake-holders. This friendship is mostly developed by ways of declaring dividends and sharing profits.
So, having considered the above-mentioned factors which might help you make a sound decision regarding a well-crafted blue chip investment, it’s now time to explore some of the best equity mutual funds.
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