Introduction to Blue Chip Stocks for Kids and Teens
This video explains the concept of blue chip stocks in a simple, concise way for kids and beginners. It could be used by kids & teens to learn about them, or used as a money & personal finance resource by parents and teachers as part of a Financial Literacy course or K-12 curriculum.
Suitable for students from grade levels:
- Elementary School
- Middle School
- High School
The topics covered are:
- What are Blue Chip stocks
- The origin of the name “Blue Chip”
- Why should you buy stocks of Blue Chip companies
- What makes a company or stock Blue Chip
What are Blue Chip stocks?
Blue chip stocks are stocks from large, well established, and reputable companies that are usually household names. These companies have proven their worth by surviving through good times and bad.
Some examples of Blue Chip stocks include Apple, Coca-Cola, Disney, Amazon, Walmart, Citigroup, and Boeing.
How did Blue Chip stocks get this name?
The name “Blue Chip” comes from poker, where the highest value chip is blue. Since Blue Chip companies are very valuable, they got the name Blue Chip stocks.
Why should I buy Blue Chip stocks?
The main benefit of blue chip stocks is that they are safe, low-risk investments. Because Blue Chip companies are well established, they don’t have a lot of risk, and are very good at holding their value.
So if you are an investor who is looking for a low-risk company to invest in, Blue Chip stocks are a good choice.
What makes a company or stock Blue Chip?
There are a few key factors that signal that a company is Blue Chip.
- It has a large market capitalization – usually 10 billion dollars or more.
- It has a good history of growth, and has survived market downturns.
- It is part of a leading stock index, like the Dow Jones Industrial Average or S&P 500.
- It pays regular dividends, possibly even increasing dividend payments annually
Not all Blue Chip stocks meet all these criteria, but most do, so this is a good rule of thumb to evaluate whether or not a company qualifies as Blue Chip.