When it comes to investing, CNBC's Jim Cramer always says investors must have two discrete places for their cash.
The first is a retirement portfolio, which is more conservative and should be invested through a tax favored vehicle like a 401(k) or an Individual Retirement Account, the "Mad Money" host said.
The second is a discretionary or "mad money" portfolio. This is the place to take more risks with money once a retirement fund has been invested.
The first $10,000 invested in the market should go to a low-cost index fund or exchange-traded fund that mirrors the S&P 500. This gives investors a way to get exposure to the stock market gains without putting in the time or effort needed to pick individual stocks.
One of Cramer's top rules for young investors is that they should take more risks. That does not mean they should go crazy and speculate with all of their savings. But it does mean using some discretionary money to bet on high-risk long shots, or smaller, lesser-known companies with massive upside potential.