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Cramer To Parents: Invest In Your Kid's Future ASAP

Cramer To Parents: Invest In Your Kid's Future ASAP

When is the right time for parents (and grandparents) to invest in their children's name? The sooner the better, at least according to CNBC's Jim Cramer.

All it takes is a few hundred dollars to get started, Cramer said during a recent "Mad Money" show. A small investment in an index fund or exchange-traded fund, such as the S&P 500's SPDR S&P 500 ETF Trust (NYSE: SPY) will go a long way when considering the compounding effect over decades. In fact, a high yielding index fund can lead to a doubling in value by the time the child reaches the age of 10.

Parents who would prefer to invest in individual stocks would be wise to pick just two companies. The first pick should be a stock with a history of dividend growth that allows for re-investment in the stock. For example, 3M Co (NYSE: MMM), Procter & Gamble Co (NYSE: PG), Kimberly Clark Corp (NYSE: KMB) and PepsiCo, Inc. (NYSE: PEP) are all examples of steady consumer good names with growing dividends.

The second stock pick should offer opportunity for growth, or a stock with a "a little more juice." In this case, investors should buy for their kids one of the FANG stock -- Facebook Inc (NASDAQ: FB),, Inc. (NASDAQ: AMZN), Netflix, Inc. (NASDAQ: NFLX) and Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL).

"Don't put this off," Cramer emphasized. "This must be done at the earliest moment to get the most time involved for your brand new loved one. No one has ever regretted this idea."

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