Why Blue Chip Mutual Funds Are A Go-To For Wealth Creation?
These companies have a reputation for consistent performance and a solid financial foundation and hold a dominant position in the industry. Bluechip funds aim to offer investors long-term capital growth by leveraging the stability and strength of reputable companies.
Here is a complete guide for investors who wish to invest in these funds and grow their wealth.
What Are Bluechip Funds?
Bluechip mutual funds or equity mutual funds that invest in shares of well-established companies. These companies have a long history of strong and a proven record of performance. Bluechip funds provide steady growth over the long term.
These stocks are seen as stable stocks owing to their well-tested business models. The operations are well-established and operations are foolproof.
Working of a Blue Chip Mutual Fund:
- Bluechip funds gather money from many investors to buy shares of well-established companies.
- Fund managers select a diversified mix of stocks from various sectors to create a balanced portfolio.
- The performance of these funds is directly proportional to the success of the underlying blue-chip stocks.
- This allows investors to benefit from potential profits without investing in individual companies.
How do Blue Chip Mutual Funds help with Building Wealth?
Here are 5 reasons why investing in bluechip funds can be a suitable option:
- Stable Dividend Payment Policy
Consistent payments that come with bluechip funds in terms of dividends serve as an extra source of income for investors. Whether you are a retired individual or a young person, a steady source of cash flow is always beneficial for wealth generation. Regular updates on holdings are provided to investors to keep track of the performance.
- Comparatively Low Risk
Bluechip funds are offered by companies from various sectors which diversifies a portfolio and spreads the risk. Also, they are less volatile than mid cap or small cap funds which suit investors who wish to invest in equity but wish to take a low risk.
- Offered by Established Brand Names
Bluechip mutual funds are offered by companies with a very strong track record. These companies enjoy a competitive edge over established companies, making it easier to earn returns when inflation is high. Complexities of selecting individual stocks can be avoided for beginners.
For instance, an SBI Blue Chip Fund is a popular bluechip fund and has provided consistent returns to investors over the long term.
- Capital Appreciation
Capital appreciation entails value added to your investment over a period. These funds grow an investor’s wealth gradually which makes it an ideal investment option for:
– Investors who want to park their money safely for steady returns.
– Retired individuals who want capital preservation with a stable source of income.
– First-time investors seeking a dependable entry point into equity investments.
– Bluechip funds are open-ended funds. Investors can redeem units whenever needed such as, in times of financial distress.
Conclusion
Bluechip funds offer the potential for capital appreciation and payment of regular dividends. To achieve long-term financial growth, blue chip funds also provide stability to investors. However, investors must bear in mind that there is no guarantee that the objective of the scheme will be met. So, invest in these funds based on your goals and risk tolerance levels.
Mutual funds are subject to market risks. Therefore, investors are advised to go through all scheme-related documents before investing. Evaluate your risk tolerance and financial goals before adding bluechip mutual funds to your portfolio.