Cramer to MainStreet: You Can’t Afford to Play It Safe in Your 20s

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I’m not one to review people's portfolios any more. Just too hard and too much darned work. But I’ve got friends in jams—younger friends—and for them, I find the time.

Which is why I was gratified to see the portfolio of a 20-something sister of one of my daughter’s friends yesterday. She was worried. We are all worried, and she didn’t want to be doing the wrong thing.

She showed me a portfolio of five mutual funds—the upper limit, anything more than that and you are a fund of mutual funds—and I blanched. If it were for me, I would be scared to death. But she’s half my age, so it was perfect. Three of her five funds were as aggressive as all get out, and the other two were value funds that haven’t been caught on the shoals of Fannie and Freddie.

I was reminded immediately of what I told NASCAR’s Kyle Busch and Jimmie Johnson—for my TV special, the American Dream with Jim Cramer, that ran Sunday night on NBC—only in your teens and 20s can you take on that kind of risk. You can afford to gamble more because you have so many pay checks ahead to make it up if the risks don’t pan out.

And because you can’t get really rich on a portfolio of staid old names, in your 20s you have to be looking for the next Google or First Solar or Intuitive Surgical.

If you don’t have time to seek out those kinds of stocks yourself, you need funds to do it for you. The aggressive funds in the portfolio I reviewed for the sister of my daughter’s friend all fulfilled that function. Many of them were the same funds that I recommended in Stay Mad for Life for those who want to be aggressive.

Everyone knows this market is horrible. No one knows when it is going to end. Everyone knows there are bargains among the rubble. Few have time to find them.

I suggest for anyone in their 20s, go as aggressive as possible with the funds that have the highest risk reward. Those are the ones that can make you rich while you are waiting.

And no bonds please. Not at that age. Plenty of time for bonds coming right up…in 30 years that is.

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