Jim Cramer is one of the most recognizable investing experts, and makes a living offering energetic stock-picking advice each weekday on CNBC's Mad Money. The former hedge fund manager has a lot to say about how and where to invest your cash. He may not be a perfect investor (who is?), but he offers some sound, common sense tips for anyone looking to place some money in the markets.
Here are 11 pieces of financial wisdom from Cramer, gleaned from his TV appearances, books, and interviews.
1. Invest in Stocks
If there is one piece of investment advice that Cramer touts more than any other, it's that stocks hold the key to wealth. His CNBC show, Mad Money, is entirely based on offering stock-picking advice. In his view, only stocks — and by extension, many mutual funds and ETFs — can someone amass enough wealth to retire comfortably.
2. Get Out of Debt
Cramer has noted repeatedly that it makes little sense to invest your money in the stock market when you have high-interest credit cards to pay off. "You're just not going to be able to generate returns that are consistently high enough to cancel out the sky-high interest rates that most [credit] cards carry," he told viewers in 2013.
3. Get Health Insurance
There are many young people who've decided to pay the Obamacare penalty rather than buy insurance, based on the notion that they are healthy and can live without insurance. This is a mistake, Cramer says. "One serious illness, a couple hospital visits, and you can kiss all the capital you've spent years building in the market goodbye," he said.
4. Don't Believe Everything You Hear on Television
Yes, Jim Cramer, the host of his own television show, actually said that. "I think you are naive if you simply believe what you hear. The vetting process to get on television simply isn't all that rigorous," he wrote in his book, Jim Cramer's Real Money.
5. Understand Bonds
Cramer is a stock lover, but acknowledges that bonds can be an important part of many retirement portfolios. And, he says that if you don't grasp the mechanics and influence of bonds, you won't be as successful when picking stocks. "If you don't understand how bonds work, I think you will not be able to make nearly as much money as if you do," he wrote.
6. Don't Be Emotional
On his television show Mad Money, Cramer doesn't exactly come off as a cool and level-headed guy. But the truth is that he knows that research and reason drive sensible investing. "Emotion has to be checked at the door in this business," he wrote in Real Money.
7. Have Patience
Like many successful investors, including Warren Buffett, Cramer is a proponent of finding value. And that means that patience will play a big role in your success. "I see so many people throwing in the towel on companies that have real assets and real worth just because they aren't working now, and it angers me," he wrote.
8. Keep It Simple
Cramer's discussion of stocks can be bewildering to the new investor. But he recommends getting back to basics if you have a relatively limited amount of money to invest. On June 21, a Twitter follower asked Cramer what to do with just $300. "First 10 thousand goes into an index fund," he replied.
9. Give Wealth Back
In Cramer's view, it's not enough just to get rich. You need to do something with your money, by either giving it to charity or building new ventures. "If you get rich, and there is a good chance you will, try to give back, not just in charity but create something, a company that can grow," he told Forbes Magazine in 2014. "Invest in something new. I have helped start six businesses. Those have provided food, roofs over peoples' heads, and health care."
10. Invest Early for Retirement
Cramer has often told the story of how he lived in his car in the late 1970s but still managed to put $1,500 into a retirement account. Think of what that investment is worth now. Cramer is a huge proponent of using 401(k) plans and Roth IRAs to build retirement wealth with tax advantages.
11. Do the Work
If you want to pick winning stocks, Cramer says, you have to sweat for it a little. That means parsing earnings reports carefully. It means listening to investor conference calls. It means reading the independent research reports. The good news is that all of these resources are readily available. "I have resources you don't have, but they are way overvalued compared to information I glean from public information about stocks," he wrote in his latest book, Get Rich Carefully.