Trust in the market leads to long-term gains, Jim Cramer says

CNBC’s Jim Cramer on Tuesday stressed his belief that the market can be vehicle for wealth in the long term, suggesting that investors park their money in both index funds and growth stocks.

“We’ve been blessed with a tremendous market here, I know that,” Cramer said. “But it won’t always be. You have to learn to trust the market.”

According to Cramer, it’s wise to have a “bifurcated portfolio,” with half devoted to index funds and the other half into five stocks — including one solid speculative investment and one insurance investment, like gold or cryptocurrency. He suggested a good stock portfolio needs insurance the same way that a house or a car does.

It’s important to put at least a little bit of money away each month, Cramer continued, as well as stay in the market through shorter-term hiccups. He said he recommends investors own good quality growth stocks instead of trading in and out of companies and that they let their gains compound.

Cramer also said he thinks that the current younger generations have the opportunity to reap significant rewards from their investments. The process of making money is easier in the past, he said, adding that people now have a wealth of investing and market knowledge at their fingertips.

He also referenced his new book, “How to Make Money in Any Market,” and said he feels it’s important to teach younger investors about the market because many are in the process of inheriting large amounts of money — and he said they tend to trade instead of invest for the long haul.

“There are amazing stocks out that that can and will change your lives for the better,” Cramer said.