Blue-chip stock is a large company with a very good reputation. These are large, well-established and financially sound companies that have worked for many years and have honest salaries, often paying dividends to investors. Blue-chip stocks usually have billions in the market, often becoming market leader or among the top three companies in its field, and often have a family name. For all these reasons, blue-chip shares are among the most popular buying among investors.
What are blue-chip stocks?
While benefit payments are not entirely necessary for stock to be considered as a blue chip, most blue chips have long records of paying stable or incremental profits. The term is believed to be derived from poker, in which the blue chips are the most expensive chips. The shares are issued by blue-chip companies, i.e. companies with the highest market capitalization are called blue-chip companies.
The companies that issue these shares are well-established and enjoy great popularity in the market; therefore, the shares issued by them are the most important in the market.
People can invest in Blue-chip shares in India directly or through Mutual Funds.
Some of the best blue-chip stocks of India are Tata consultancy services (TCS), HDFC bank, Infosys, ITC ltd, HDFC, Coal India, Hindustan Unilever, Wipro, Axis Bank, Maruti Suzuki, HCL technologies, Asian paints, BPCL, Bajaj Auto etc.
Blue-chip stocks features
Assured returns - Blue-chip stocks generate quarterly returns in the form of shares. The fact that companies are well-established and serve as a safe investment destination for many investors. With this security comes the assurance of obtaining sustainable but guaranteed benefits.
Credit worthiness - Blue-chip companies have enough money to clear their money and responsibilities easily. This, in turn, puts the stocks out of those companies high on creditworthiness.
Risk factor - As large companies with stable financial performance release these shares, the risk factors associated with blue-chip companies are relatively small. Investors can continue to reduce the risk burden associated with blue-chip stocks by diversifying their investment portfolio.
Investment horizon - The investment period is usually more than 7 years. Such extended time makes the Blue-chip ready to achieve long-term financial goals due to its long-term investment.
Growth prospect - Blue-chip companies are those big companies that have reached their maximum growth. This is affecting Blue-chip shares that are slowly growing but stable over time.
Taxation - Profits generated by blue-chip stocks in India are treated as revenue under Section 80 C of the Income Tax Act. Temporary cash gains are taxed at a rate of 15%. However, long-term financial benefits exceeding Rs. 1 Lakh is taxed at a rate of 10%.
Blue-chip stocks in India are regarded as desirable investment strategies for achieving long-term financial goals.
Here are a few reasons to invest in Blue-chip stocks -
Provides high paid quarterly returns.
It helps the structure of the corpus.
Assists portfolio classification.
Strengthening the impact of inflation, inflation and economic collapse.
However, because of their high price, blue-chip stocks may not be suitable for small investors.
Strong financial position, excellent market ratings and credit rating of blue-chip stocks help their investors and extend many benefits to them.
Blue-chip stocks investors will take advantage of the following benefits -
Despite market conditions, blue-chip stock investors are getting a steady return on their investment. Such compensation is made in the form of a dividend which is extended quarterly.
Being a long-term investment option that comes with an investment limit of more than 7 years. It gives investors enough time to build a healthy corpus over the years for their financial purposes.
Blue stock companies are high-profile corporations that do not make money in just one channel. Not only does it allow them to maximize their losses by getting back to work but it also allows their investors to spread the associated risks of blue stocks.
Blue-chip companies enjoy market excitement and high debt. It directly enhances the market value of blue-chip stocks and makes it an attractive investment option for investors. This directly helps the purchase and sale of such liquids which naturally produce liquids.
Because of their market loyalty and reliability, blue-chip stocks in India come with low risk. The low-risk burden makes them ideal for risk-free and savvy investors.
However, investors who want to make a big profit with limited exposure to market risks may opt for alternative investment options -
Real state - Although the growth of the housing market in India has slowed down, it is still one of the most profitable forms of investment in the region. Investors can buy, rent or sell residential and commercial properties and generate income over time.
Exchange traded funds - ETFs are a set of securities traded on a trade that is considered a low-risk investment option. ETFs usually contain stocks, bonds, commodities and other investment instruments and come with a low cost and the associated minimum costs. According to their need, investors can invest in gold ETFs, Liquid ETFs, International ETDs or Bank ETFs.
Fixed deposits - Investors who want to make profits and tax benefits simultaneously can invest in planned investment schemes instead of blue stocks. Depending on their need, investors can invest their money in random, long-term and short-term deposits. FDs also allow investors to get a loan from it in case of an emergency.
Government bonds - Government Bonds are low-risk investment options issued by the Indian government and monitored by the RBI. These bonds extend consistent interest to their investors and give them the opportunity to diversify their investment portfolio. In addition, government bonds extend tax benefits to investors and provide income.
Blue-chip stocks in India are a great way to invest in people who want to generate long-term profits. However, investors can always explore alternative investment options and improve the profitability of their investment positions.
In addition, they should see the need to prioritize their financial goals, income and risk appetite before investing in any investment option.