Jim Cramer’s guide to investing: How to invest as you get older

CNBC’s Jim Cramer stressed that investing goals can change as you age. The older you get, the less risk you may be able to take, he said.

But while he said he thinks it’s a good idea for investors to have a mix of index funds and individual stocks, Cramer’s rule for those just out of college is to invest your first significant chunk of savings in an index fund. The possibility of one bad stock hurting your nest egg in your twenties is too risky, he said.

“There’s too much risk in individual stocks to just put together a portfolio of names of your own choosing,” he said. “So, at a minimum, I am demanding that you put your first ten grand of savings from your first job into an index fund, the S&P 500 being my favorite.”

As you get older, Cramer suggested curating a diversified stock portfolio. But he advised not to invest in fixed income assets until your thirties or forties, and even then to do so gradually.

Above all, Cramer stressed that only you can decide how much risk to take, adding that you should always ask yourself what you would do in a sell-off.

“It’s your life, not mine,” he said. “So get comfortable with what you can live with. But risk, at least until your middle years, should remain a friend.”

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