Why do people say better to buy a blue chip stock than keep the money in fixed deposit?
Fixed deposits are extremely liquid asset types with interest rates established at the time of launch. CD’s are fixed deposits with interest in the US running about 3.5%, depending upon the amount of each CD. Currently in India, by way of contrast, prevailing rates amount to 10%. Interest received by the CD holder will not vary as it’s locked in at time of launch. Market whimsies being what they are, blue chip stocks will never guarantee a fixed rate of return. However, because they prosper at times, shareholders (investors) get to reap part of that harvest. This can take shape in the form of dividends and also via trading out of shares after enjoying a run-up in valuation. Blue chip stocks will not suit everyone. In fact, I own no blue chip stocks, favoring less expensive, higher risk equities. I usually recommend blue chips to friends and associates who wish to have reasonable security when it comes to preserving capital while getting to share in any prosperity due the company of cho
