Jim Cramer’s guide to investing: Know the stocks that match your needs

CNBC's Jim Cramer said investors should understand which stocks are most suitable to their individual needs before they buy.

"I want you to ask yourself, what is your tolerance? How much risk do you want out of a stock?" Cramer said. Unlike clothes, home electronics and other material goods, stocks cannot be returned and refunded for the price you paid. That's why CNBC's"I want you to ask yourself, what is your tolerance? How much risk do you want out of a stock?" Cramer said. "With digital brokers, there's no real protection, just a signed form that says you get it. You may not know what you're getting into.

When Cramer first began giving market advice, he would often leave a general message on his answering machine naming his top stock pick for that week. Soon after he started at Goldman Sachs, however, one executive heard his message and called him back. The executive explained that before recommending a stock to someone, Cramer had to understand the individual's needs and level of risk tolerance."Caveat Emptor? No.

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