Brocker.Org: Cramer Remix: Here’s exactly how much you should invest in bonds as you age

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When it comes to investing, Cramer always says investors must have two discrete places for their cash.

The first is a retirement portfolio, which is more conservative and should be invested through a tax favored vehicle like a 401(k) or an Individual Retirement Account.

The second is a discretionary or “mad money” portfolio. This is the place to take more risks with money once a retirement fund has been invested.

The first $10,000 invested in the market should go to a low-cost index fund or exchange-traded fund that mirrors the S&P 500. This gives investors a way to get exposure to the stock market gains without putting in the time or effort needed to pick individual stocks.

One of Cramer’s top rules for young investors is that they should take more risks. That does not mean they should go crazy and speculate with all of their savings. But it does mean using some discretionary money to bet on high-risk long shots, or smaller, lesser-known companies with massive upside potential.

Cramer loves the public school system, but the truth is that it cannot be relied upon to teach children about money.

“If you want your children to become fluent in the language of finance, you are going to have to do it yourself,” Cramer said.

That means not waiting until after kids go to college to teach them about financial literacy. Once kids go to college, they will be bombarded by credit card offers that could seem irresistible. Credit-card debt on top of student loans could send someone into debt for decades.

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