5 Jim Cramer-Inspired Money Lessons For Gen Y Entrepreneurs

By Mason Revelette
culled from:forbes.com
Jim Cramer: that big ball of energy on CNBC. Yeah, you know the one I’m talking about. Or not — based on the ratings lately, I might be the only Gen Y’er who is watching. But it shouldn’t be that way. Every single day, Cramer says something that could benefit you young entrepreneurs out there, whether you have a tech startup or want to open a sandwich shop. All I can do is recommend that you watch, too.
Don’t roll your eyes. Your future as a successful entrepreneur might depend on it. Even if you won’t take my advice and watch, at least read this article. These tips on the stock market might make you change your mind about keeping that (small) stack of money under your mattress where the big bad banks can’t find it (I get it, I saw the housing crash, too). And if you’re able to profit from the market, the extra cash can help you to bootstrap your next startup idea — or even allow you to quit your day job to focus on a new project. Obviously you want to fund your retirement too, but these financial lessons can open up other opportunities that a 9-to-5 may not.
With that, here are five quick investing lessons paraphrased from the one and only Jim Cramer:

1. The younger you are, the more risk you should be taking. Whenever a young investor calls in to his Mad Money show, Jim gets extra excited. I know, hard to believe, but he does. Inevitably, almost every single one of those calls circle back to how important it is to structure a portfolio, no matter how small it appears. The ‘risk’ he refers to is the percentage of stocks owned versus bonds. As a general rule, stocks are riskier than bonds. But as a 20-something, that’s exactly how your portfolio should look, with 100% in stocks. The older you get, the more bonds you will begin to replace stocks with.
2. Invest in what you know.  You may not completely understand biotech companies and their stage II trials and all that, but that’s ok!  Look around your three-foot sphere. What do you see around you? An iPhone? Nike running shoes? How about that Chipotle burrito? You probably placed a Chipotle order on your iPhone after your run in your new Nikes last week. Understanding what a company does, how they make money, and where the company is headed is 90% of the battle. If you can answer those questions, you should probably dip your toe into buying shares of that company.
3. Choose ‘best of breed’ stocks. ‘Best of breed’ is the term Jim uses to describe the companies that are the best at what they do. Quick examples: Apple is better than Blackberry or Nokia. Nike continues to outperform Reebok and Adidas. Chipotle’s line seems to get longer every day, while Krispy Kreme stores are eerily quiet. The best of breed stocks have the best brands, the best balance sheets, outperform the market (their stocks performs better than the average of every stock combined), and have great staying power and long-term momentum (fads are scary!)
4. Look for safe, growing dividends. Dividends are your best friends. They are the tangible result of an investment gone well. What Jim likes: the 3% dividends from those ‘best of breed’ companies. They tend increase their dividend over time because they are growing their revenue and have enough cash to throw some back your way. Be wary of stocks above 6% or 7% dividends. They may not be able to perform at that promised level and can actually hurt your investment big time. Oh, and reinvest those dividends back into more shares of that company giving you the dividend. Compounding interest at its best.
5. Have fun! As you can guess, Jim Cramer loves investing. I mean loves it. And so can you! Seeing your investments grow can be very exciting, but DO NOT panic if you see it sliding in the other direction. Warren Buffet bought up shares of amazing companies during the recession and has been killing it for the last several years because he didn’t panic. Remember, you’re young and because you’re all in stocks, it’s going to be volatile. Jim always reminds us that we have decades to come back from a loss. Just stay the course with great companies, and you will enjoy investing, too. Probably not as much as Jim, though.

What other money tips should Gen Y entrepreneurs (or aspiring entrepreneurs) consider? Feel free to weigh in on the comments below.