Jim Cramer says that suitability, or the concept that certain stocks are right for some investors but wrong for others, can last investors a long time once they figure out what is right for them.
But after college, during which the "Mad Money" host does not recommend investing or putting away money at all, "things get less and less suitable," he said.
Once you are in the real world, it is critical to start saving, whether it is through an employer-provided 401(k) plan or a self-run Individual Retirement Account, Cramer said, adding that he prefers the latter because it lets you individually pick stocks.
At this point, investors should start putting together the mix between index funds and individual stocks in their portfolios.
"There's too much risk in individual stocks to just put together a portfolio of them of your own choosing," Cramer said. "So, at a minimum, I am demanding that you put your first $10,000 beyond what you have from your first twenty years into an index fund, the S&P 500 being my favorite."
While some may argue with that strategy, Cramer said that for a person in her 20s, the risk of one bad stock tanking and taking her portfolio down with it is too large. Index fund investments guard against that effect.
After that initial $10,000, Cramer encourages investors to pick stocks while staying diversified and doing their homework after they buy.
"I tell you that you need to buy a stock but then you have to keep up with it," he said. "You no longer need to spend a couple of hours a week studying your stocks. You need to read the conference calls. You can Google articles galore, so many that you'll get sick of the process very quickly."
Whatever makes investors as comfortable as possible with running their own money is the way to go, the "Mad Money" host said.
"That's what I want. Confident, not over-confident," he added.
When you get to your 20s, Cramer said you must consider what you would do in a sell-off and, following that, how much risk you are willing to take while investing.
Key questions include: Can you handle a decline and buy more on the dip? Will you wish you were not exposed to the downfall at all? Can you accept that stocks go down?
"These are crucial questions that only you can answer," Cramer said. "I would like you to take more risk and more individual stocks that have growth characteristics once you have put away that $10,000. That's my preference. But I would hate to see you commit more than 20 percent of your money, your mad money, to individual stocks. That would not be my preference."
In your 30s, Cramer recommends accruing more income by buying stocks that pay dividends and possibly investing in a fund with higher dividends than the S&P 500.
Investments in bonds should only be added to your portfolio in your 40s, the "Mad Money" host said.
"By this time, you should have been able to put enough away that bonds, even lower-earning bonds, will protect some of your invested capital," Cramer said.
When you get to your 60s and beyond, Cramer would not oppose investing up to 50 percent of your money in bonds and taking bonds up 10 percent more each decade.
But if you cannot handle the risk and think the stock market is too unstable for you, the "Mad Money" host stressed deciding for yourself if cashing out might be the better move.
"The bottom line? It's your life, not mine," he said. "So get comfortable with what you can live with. But risk, at least until your middle years, should remain a friend."