Invest in growth stocks alongside an index fund
CNBC’s Jim Cramer offers advice on how to build a balanced portfolio, recommending both individual growth stocks and index funds to investors.
“Putting some money into an index fund isn’t bad advice; it’s a good way to play it safe,” Cramer said. “But most people can’t afford to play it completely safe unless they’re already rich, so you have to put the other half of your assets into a mix of individual stocks and non-stock hedges of your choice.”
Cramer suggested that choosing one’s own stocks could be profitable. But he noted that the practice is also risky, which is why investors need index funds as backup to protect against inevitable investment mistakes.
The design of index funds is average, Cramer continued, saying they are meant to reflect American business. He noted that index funds alone will not make as much money as stocks with the highest growth rate.
He suggested that investors looking to earn above-average returns should buy commodities such as gold or crypto, as well as a variety of stocks from different sectors. Cramer emphasized that it’s smart to look for good growth stocks that have historically performed well. Cramer said it’s also important to “hit the ground running” when managing a portfolio, which means constantly researching companies, monitoring earnings reports and keeping up with industry news.
“Sure, it’s better to be average than broke,” he said. “That’s why I recommend putting half of your savings into an index fund like SPY, but you need to use the other half to achieve bigger gains.”
