Certain pieces of money advice are considered classics for a reason. Just about any financial advisor will tell you to build and maintain an emergency fund or invest enough in a workplace retirement plan to receive an employer match because these are moves that make sense for almost any client.
For many investing pros, building a portfolio out of low-cost index funds falls into that category. By matching the returns of a broad stock market index, the thinking goes, an average investor can come out ahead in the long run — even over professional investors attempting to beat the market. Over the 15 years that ended June 30, just 12% of actively managed funds that track large-company U.S. stocks outperformed the S&P 500, according to S&P Global.
But Jim Cramer doesn’t want you to be an average investor. In his new book “How to Make Money in Any Market,” the host of CNBC’s “Mad Money” lays out what he calls a “radical” plan to help readers build long-term wealth.
“Let’s free ourselves from the rigid, tried-but-not-true approach that keeps you shackled by the chains of middling returns,” he writes.
Instead of the index funds-only approach, Cramer says your portfolio should be divided into three parts.
