The stock market explained for young investors

For younger investors who are trying to take an active hand in managing their money, the first step in achieving financial freedom is to invest.

It's the only way to creating a life that isn't completely dependent on a paycheck, Cramer says. The good news about being a young investor, is that they have time on their side.

Cramer has found that too many people begin saving and investing late in life, which could limit the risk one can take. So for those looking to get involved with investing, Cramer shared three tips for young investors.

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How to expect the unexpected Cramer: My new way to diversify your portfolio Cramer: Bye-bye foreign stocks, hello geography. However, there is a caveat. You must pay off credit card debt.

It doesn't matter how much money you make in the stock market, that interest you are paying on a credit card will eat away at your returns and may be more than the profits you make.

Cramer thinks the stock market is a great way to trick investors into saving money they might otherwise spend. Not to mention the fact that their returns are so small, they're basically meaningless," he said.

Take risks if you are young Younger investors can afford to take more risk. Think about it — if you make a mistake in your 20s, you have the rest of your life to fix it. They can afford to buy into higher risk stocks with a larger potential upside. Essentially, the closer one gets to retirement the more conservative the investing strategy should be. It's never too early to save for retirement Start investing for retirement, especially if your job has an option for a k , and contribute to a Roth IRA.

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It can only help in the long run! After all, it is never too soon to start planning for the days when you can be free of the shackles of a paycheck, thanks to your investments at a young age.

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Full Episodes Live Store. Jim Cramer knows from being broke, but he sees no reason why you should. Invest your savings Cramer thinks the stock market is a great way to trick investors into saving money they might otherwise spend. Watch full episodes TV schedule.

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