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Why You Should Already be Investing in Blue Chip Stocks
Investing might not sound as exciting as going on an overseas holiday or hanging out with your friends at a café.
But like riding a bicycle or cooking a simple meal, it’s something that everyone should learn.
Investing helps you preserve the value of your hard-earned money, and even better, can let it grow beyond what it was originally worth. Check out our Investing 101 blog post to get a rundown of what investing is all about.
As time passes, inflation weakens the purchasing power of your money. That means any given sum of money will be able to buy less and less over time. For instance, twenty years ago, you could buy a decent plate of chicken rice at a hawker centre for $2. Fast forward to 2018, and $2 can barely get you a drink. Investing your money, instead of leaving it in a bank account, will help you beat inflation.
While you might not have too many financial commitments when you’re young, at some point in the future you’ll need more money than you do right now.
You will need a retirement nest egg to draw upon when you finally decide to stop working. And you might someday also need large amounts of money, such as to pay for a home or your future child’s education. OCBC Life Goals is a useful (and free!) tool to get you on track towards your financial goals.
Investing can help you reach all of these goals. And it’s a great idea to start investing as early as possible.
Blue chip stocks are shares in companies that are well-established and have a track record of financial stability. Basically, blue chip companies are businesses people trust. Blue chip stocks offer a suitable way to invest in equities at any age. They are one of the more reliable ways to grow your money over a long period of time. And because blue chip stocks are considered relatively stable, they can be less stressful to invest in than more volatile equities.
Here are some reasons why you should start investing in blue chip stocks as early as possible.
Blue chip stocks offer a low-risk way to invest for the long term
If your idea of investing is a roller coaster ride of heart-stopping speculation, you've been watching too many Hollywood movies set on Wall Street!
There are many ways to invest depending on your risk tolerance. It's up to you to build your portfolio based on what you are comfortable with.
Whether you consider yourself risk-averse or are simply looking for a low-risk addition to your portfolio, blue chip stocks offer a good way to start investing.
Because blue chip companies are relatively stable, blue chip stocks are considered a low-risk investment. In all likelihood, no matter what happens tomorrow, the most established companies in the banking or real estate sector would not to collapse overnight, so investing in them is a relatively safe bet. That doesn’t mean you don’t need to do your research and monitor your investments though!
You don’t need a lot of money to invest in blue chip stocks
Investing isn't just for "rich people"! You don't need to have a lot of money to start investing. In fact, it is a bad idea to wait until you do before you make your first investment, because you'd have wasted lots of precious time during which your money could have been growing.
Investing in blue chip stocks is a great option for those who are just starting out in their careers and may not be able to put aside too much.
For instance, a long-term plan such as the Blue Chip Investment Plan can be extremely beneficial when you’re young and have lots of time to grow your wealth. It enables you to start building a diversified portfolio of blue chip stocks and ETFs with an affordable investment amount of as little as S$100 a month. This is inexpensive even if you’ve just started at your very first full-time job. Investing in the 17 blue chip shares without the blue chip investment plan would be prohibitively costly for many, as you would have to buy in lot sizes of at least 100 shares of each company. With the Blue Chip Investment Plan, you no longer have to worry about minimum lot sizes.
Blue Chip Investment Plans help you avoid emotional investing
Most budding investors tend to make the rookie mistake of trading based on market sentiments and end up buying high and selling low. As a beginning investor, you’ll be looking to invest for the long-term, rather than engage in short-term speculation or trading.
Another benefit of the Blue Chip Investment Plan is that it’s an affordable way to invest using the dollar cost averaging method. When you invest in this manner, you consistently invest a fixed sum of money at regular intervals no matter the cost of the asset. This is an affordable and stress-free way to grow your portfolio.
Start investing in blue chip stocks for as little as S$100 a month with FRANK by OCBC’s Blue Chip Investment Plan.
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This is for general information and does not take into account your particular investment and protection aims, financial situation or needs. You may wish to seek advice from a financial adviser before making a commitment to purchase an investment product. In the event that you choose not to seek advice from a financial adviser, you should consider whether the investment in question is suitable for you.
This advertisement has not been reviewed by the Monetary Authority of Singapore.