Here’s our Club Mailbag email [email protected] — so you send your questions directly to Jim Cramer and his team of analysts. We can’t offer personal investing advice. We will only consider more general questions about the investment process or stocks in the portfolio or related industries. This week’s question: Hi Jim, I love being a member of the club. We recently were blessed with our first grandchild and set up a UGMA account. What is your “crystal ball” for investing with a 20-year time horizon? Individual stocks or an ETF with a tech focus? Probably put in $5,000/year for her. Thanks for any recommendations you can give. —Regards, Mike The first thing Jim Cramer recommends to investors who are just starting to build a portfolio is to put the first $10,000 into a diversified stock index fund, such as an exchange-traded fund (ETF) that tracks the board-market S & P 500 index. We looked at the biggest three S & P 500-tied ETFs in last week’s Mailbag commentary . This advice is the same if the portfolio is for you personally or for the benefit of your grandchild in the form of the aforementioned UGMA account , which is a type of custodial account that allows adults to save and invest money on behalf of a child without the time and expense of setting up a formal trust. You also could think about — given a long-term investment time horizon — adding something a bit more growth-oriented, such as an ETF that tracks the tech-heavy Nasdaq 100, which tends to be more volatile than a broad-based S & P 500 fund. There will be some overlap. Remember, owning two ETFs doesn’t necessarily increase your diversification. In this case, you would be increasing exposure to large-cap growth stocks. Whether one or both of these type of ETFs becomes your starting point, you can also start thinking about individual stock ownership. Obviously, we love Apple (AAPL) and Nvidia (NVDA), our only two “own it, don’t trade it” names. Given that designation, these are the two we would consider for anyone thinking about investing on a multiyear time horizon. The Investing Club portfolio is made of more than 30 stocks. Any names with a 1 rating are considered buys at current levels. However, on any given session, shares could be way up or way down, so our daily commentary and your own homework should also weigh on your trading decisions. The goal of investing is to maximize returns, however, we would argue that if you really want to maximize long-term returns for your grandchild, the most important thing you can do for them, aside from investing in their name early on, is to get them interested in the market from a young age. A way to do that is to pick stocks that they can relate to. If they’re not interested, it’s going to be very difficult to get them to believe in the wealth-creating power of the market. That doesn’t mean you have to take on significant exposure in a name simply because it’s a household name, even one share can do the trick as it will allow your grandchild to relate to the stock and set you both up to follow the name and learn about the investing process together as they grow older. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Here’s our Club Mailbag email [email protected] — so you send your questions directly to Jim Cramer and his team of analysts. We can’t offer personal investing advice. We will only consider more general questions about the investment process or stocks in the portfolio or related industries.
This week’s question: Hi Jim, I love being a member of the club. We recently were blessed with our first grandchild and set up a UGMA account. What is your “crystal ball” for investing with a 20-year time horizon? Individual stocks or an ETF with a tech focus? Probably put in $5,000/year for her. Thanks for any recommendations you can give. —Regards, Mike
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