Jim Cramer’s advice for young equity investors who want to build wealth

Date:

Mad Money Jim Cramer

Scott Murin | CNBC

CNBC Jim Cramer On Friday, he pleaed a young investor who was unfamiliar with the stock market and wanted to build long-term wealth.

“I’m asking all these young investors who keep messing around with options. I ask you, just own something and own it in the long run.” “Seriously” Said the host.

“If I can afford it, I buy a few shares a month. That’s how I started. If you take the time to reinvest your dividends, you have a chance to make a lot of money.”

Friday’s Cramer comment came after the brokerage app Robin hood Report fourth quarter results 1 day ago. Known to be popular among young people, the investment app recorded $ 264 million in transaction-based revenue. Of this, $ 163 million was due to options trading, an increase of 14% compared to the same quarter of 2020.

The option gives the investor the right to buy or sell stock at a given price in the future, but it is not obligatory. Optional activities reached record levels in 2021, partly due to their growing popularity among retailers. CNBC reported in December..

In particular, Kramer expressed concern about the possibility that some young traders would primarily trade options. He said it had a particularly worrisome impact during the challenging start of the market by 2022.

“If you buy a call option during this difficult time, a piece of paper that can turbocharge your return by taking on a large amount of additional risk without actually gaining an advantage is Other than this afternoon’s rally, Especially in the last 10 days, probably losing a huge amount of money. “

A better strategy for young investors is to invest in real stocks in the long run, Kramer said. As an example, he pointed out Apple, which also reports quarterly numbers on Thursday night.

“Rather than tinkering with Robin Hood’s options, we should sit firmly in a high-quality stock like Apple and accumulate more when people give it up,” Kramer said. “I think it’s much better to follow the slow and steady rise of quality common stock like Apple, which is gradually rewarded over the years, years and years,” he said.

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Disclosure: Cramer’s Charitable Trust owns shares in Apple.

Jim Cramer’s advice for young equity investors who want to build wealth

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