Stock Investment Advice – What Kind of Stocks Are Stable?

If you are like most investors, you are in search of the holy grail of investing: a stock with limitless potential and almost no risk. The truth is that these types of stocks don’t really exist. Every investment you make with your money carries a degree of risk, but there are certain investments that have the least amount of risk out there. It is important to note, however, that it is almost always the case that the investments with the least amount of risk also carry the least amount of potential profit. With that said, blue chip stocks are often the most stable and most reliable stocks on the market.

What is a blue chip stock? A blue chip stock is a stock that has a demonstrated history of earning money and avoiding rapid changes in value over a long period of time. Often, blue chip stocks belong to long established companies like IBM, Microsoft and General Motors: companies that are relatively stable and are likely to show a modest profit at the end of next year. Over the past few years, many energy and oil companies have become respected blue chip stocks since they present the opportunity for investors to turn a tidy profit with a smaller risk than most stocks have.

No matter how long a company has been considered blue chip, there is always the chance that things could end badly. For instance, General Motors and Ford, long time blue chip stock companies have been hemorrhaging money over the past few years and their stock prices have tumbled. The same can be said for many major airlines like Delta, which was once considered a rock solid blue chip stock and is now considered a very risky investment due to the cost of fuel and many other reasons. No matter how stable or secure a blue chip stock is, you must always remember that at any time, the stock could end up going belly up.

Even energy stocks, long considered the most stable of all, aren’t immune to rapid price changes. During the Exxon Valdez oil spill, prices in Exxon stock tanked and millions of investors lost billions of dollars. Of course, now, Exxon and many other oil companies are considered just about the safest investment you can make. The same cycle happened for one time stock market darling Enron, which went from the penthouse to the dog house so quickly that it caught the entire industry off guard.

The secret to staying on top of what companies are solid blue chip investments is simply staying current on the world of finance. This is why it is so important to learn what you can about investing, even if you have a stock broker looking out for your best interests. It is possible that your broker has hundreds of clients to look out for and by the time he or she can call you and let you know that one of your secure investments are tanking, it could be too late. No matter how comprehensive your broker is, it is up to you to stay on top of your investments to avoid any possible collapse that might happen, even if you invest solely in blue chip stocks.

As you can see, it is possible to beat the world of investing at its own game, but it isn’t easy, and it takes a degree of dedication that many people aren’t willing to put forth. If you are looking at a way to maximize your profits and minimize your risk, follow these steps, and you will be well on your way.


Getting Your Investment Feet Wet

In order to get started investing you just need some willingness to learn and apply sound, proven to work principles. You can get started immediately without having much investment wisdom at all about the stock market or other investment instruments. When you begin investing you should be a conservative-moderate investor with a relatively low risk tolerance. This way you will have a way to grow your money with little risk, while you learn more about investing. However, a general rule of thumb in long-term investing is that the younger you are, the more risk you should take and aggressive you should be. However, this considers that you have performed your due diligence, have learned enough about all of your options, and properly assessed your investor profile.

One very easy first investment you can make would be an interest bearing savings account, chances are good you already have one. If you do not have one of these accounts you should; they can be opened with usually only $100, sometimes even less. A savings account can be opened at the same bank that you do your checking at, or at any other bank. One good idea may be to open this interest bearing savings account with an on-line bank that has no physical location near you, this way it forces you to keep the money in the account longer and make less frequent withdrawals. One of these types of interest bearing savings accounts should yield 2 – 4%.

Another good option you have when starting investing is to invest in money market funds. Money market investments can be made through nearly any bank. These funds have higher interest payouts than typical savings accounts, and they work much the same way. Money market accounts are also short to medium-term investments, because of this your money will not be tied up for a long period of time and still appreciate in value.

Certificates of Deposit are also investments with very little to no risk. Interest rates on C.D.’s are normally higher than those of savings accounts or Money Market Funds. You have the option to select the duration of your C.D. with interest paid regularly until the maturity (duration end) date. Another pro about C.D.’s is that they are insured by the bank and governmental agencies.

Other options for you to choose when first starting investing are treasury securities (low risk), bonds (low to medium risk), mutual funds (low to high risk), and exchange traded funds (low to high risk). However these options require more due diligence than those mentioned in the previous paragraphs, and the latter of these options (mutual funds, ETF’s) generally have more risk as they are related to stocks.

When just starting out, any one of these options above are great beginning points for delving into investing. All of these options will allow your capital to grow for you while you learn more about investing in other, higher yielding (higher risk typically) investment opportunities.

*Note: An excellent resource for checking saving account yield rates is