How to Handle Your Finances at Any Age: Cramer's 'Mad Money' Recap (Friday 6/30/17)

A version of this show aired in December.

No matter how old you are, no matter how wealthy you are, you should really have some money socked away in the stock market, Jim Cramer told his Mad Money viewers Friday, as he dedicated the entire show to generational investing, or how to handle your finances at every age.

Cramer said the stock market is still the best ladder we have for social mobility. Anyone who invests a decent chunk of their salary every year will be rewarded over the long term, bear markets and all.

In fact, from 1928 through 2014, the S&P 500 averaged a 10% annual return, including dividends. That may not seem like a lot, but 10% will double your money every seven years thanks to the wonders of compound interest. Or, put another way, if you invest $10,000 today, 40 years from now that investment could be worth $450,000.

That's why even a little money passively saved in the stock market can yield big rewards later in life, Cramer said.

Two Piles of Cash

Not all investments are created equal, Cramer told viewers. Every investor should have two piles of cash, one dedicated to retirement -- think 401(k)s or IRAs -- and another discretionary or "mad money" stock portfolio. Retirement should always come first and is invested conservatively, while the mad money portfolio can afford more risks.

How should investors get started? Cramer said your first $10,000 should be invested in an index fund or exchange-traded fund that mirrors the S&P 500. Once that goal is achieved, and you've maxed out your retirement accounts, you can then expand your investments to include at least five diversified stocks for your discretionary portfolio.

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