Jim Cramer’s Guide to Investing: You Don’t Need to Be Perfect
"Take a page from Jimmy Chill and relax."
To CNBC's Jim Cramer, short-term trading isn't the best way for most at-home investors to make money. Cramer advises part-time investors not to drive 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."
Cramer suggests sticking with stocks you believe in rather than "flitting in and out of stocks with every gyration in the broader market," especially when juggling a full-time job and a portfolio.
Steady Research is Key
He suggested that investors carefully research every stock in their portfolio so they know exactly what they own. There will inevitably be sell-offs, rotations, and "crazy action" weekly or daily, but it's not necessary to catch every top or bottom.
When to Take Profits
Cramer generally advises that it's best to take profits when your stocks surge and then use that cash to buy more when shares reach lower prices.
The Power of Index Funds
Cramer also emphasized that investors should never underestimate 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."
Summary
- Don't aim for perfection in investing
- Stick with stocks you believe in
- Research every stock in your portfolio
- Take profits when stocks surge, and buy more at lower prices
- Consider the stability and ease of index funds
Jim Cramer’s guide is clear: Stay calm, do your research, and invest wisely.
