Jim Cramer’s guide to investing: You don’t need to be perfect

CNBC’s Jim Cramer said part-time investors shouldn’t make themselves crazy aiming for perfection.

“You don’t need to be perfect at managing your money, you just need to be good enough, and that means you shouldn’t waste your time trying to anticipate every little gyration in the market,” he said. “Take a page from Jimmy Chill and relax.”

To Cramer, short-term trading isn’t the best way for most at-home investors to make money. When managing a full-time job and a portfolio, it’s wise to stick with stocks you believe in instead of “flitting in and out of stocks with every gyration in the broader market,” he said.

He suggested that investors continue to carefully research every stock in their portfolio so they know exactly what they own. There will be sell-offs, rotations and “crazy action”on a week-to-week or day-to-day basis, Cramer said, adding that it’s not necessary to catch every top or bottom. Generally, he said it’s best to take profits when your stocks surge and then use that cash to buy more when shares reach lower prices.

But Cramer stressed that investors should never discount the power of an index fund, as it’s a relatively easy way to make money.

“Sure, if you manage your portfolio well, if you do the homework and stay disciplined, I think you can beat the S&P 500 with a diversified group of individual stocks,” he said. “But not everybody has that kind of time, not everybody has the temperament, not everyone is comfortable taking on more risk to chase a higher return. And that’s perfectly fine too. See, you got to do what’s right for you.”

Sign up now for the CNBC Investing Club to follow Jim Cramer’s every move in the market.

Disclaimer