Jim Cramer: where your first $10,000 should be invested?

For young people, the biggest asset is time, so investing as soon as possible is the best choice one can make.

However, the question “where to invest” remains open. Jim Cramer suggests young people to invest the first $10.000 into Index Funds.

Index funds are the type of mutual funds, which are designed to track the performance of a particular stock market index. An example of an index fund is S&P 500. As passive investment, risk and return characteristics of index funds are limited to those of the indices they track.

Cramer believes, that before the crisis in 2008, he would advice the young people to invest in five different stocks, rather than in index funds. However, current market does not excuse the wrong moves, hence, if you get two wrong stocks out of five, that would significantly deteriorate your positions. Also, when choosing the funds, Jim Cramer suggests to pay attention at the fees, that can destroy your investments. Those fees cannot be avoided, however, can be minimized by investing in low-cost funds. Cramer’s own choice falls on Fidelity Magellan (FMAGX) and Fidelity Contrafund (FCNTX), which are both considered relatively low-cost.