Sec chair jay clayton's top investing tips: compounding, diversification and take free money

SEC chief Jay Clayton, who is in charge of protecting American investors, has strong thoughts on what Americans need to do to save for an adequate retirement. Clayton appeard on CNBC's

"The Exchange" with Kelly Evans and me to talk about the SEC's job to protect American investors, maintain fair, orderly and efficient markets, and what he is doing to help

companies going public, particularly in the now red-hot IPO market. MORE FROM INVEST IN YOU: Baby boomers face retirement crisis — little savings, high health costs and unrealistic

expectations Forget following the crowd, this is a long-term opportunity smart investors can capitalize on A Roth 401(k) offers tax advantages. Here's how it work But Clayton has also

taken a far greater interest than his predecessors in prodding America to save more. Why the interest? Clayton sees what all of us see: a potential investment crisis. He has just released a

series of videos, "Notes from the Chairman" where he shares his personal notes for investing. His first commandment is to get your financial house in order. Understand "what

you have, what you owe, and what you spend," Clayton said. "If you have high interest rate credit, the best investment is getting rid of that." Once that happens, it's

time to start investing. He keeps it simple: compounding, diversification and taking the free money. COMPOUNDING Clayton defines compounding as "making money tomorrow on money you make

investing today." Money grows exponentially, faster than in a straight line: "Starting investing for retirement 30 years before your retirement date is four times as good as

investing 15 years before your retirement date." DIVERSIFY Don't put all your eggs in one basket. "By diversifying, you reduce risk, and keep the same return, in fact in some

cases you increase returns," he said. TAKE THE FREE MONEY Finally, take the free money. "This is magic. ... If your employer 401(k) or other retirement plan offers matching, take

advantage of it. I've seen a lot of investments. I know of no investment that is better than free money," Clayton said. Clayton's tips for Investing can be viewed here. The

SEC also maintains an active website, Investor.gov, that serves as a primer on how the stock market works, the many types of investments (stocks, bonds, ETFs, annuities, etc.), how to create

a financial plan, and how to check the background of an investment professional. And, in a red-hot IPO environment, the SEC continues to maintain the Edgar website that has become the main

tool for researching companies before they go public. _For another perspective on how to save for retirement, check out CNBC's Financial wellness and education initiative, __Invest in

You: Ready. Set. Grow.__, which is part of our partnership with __Acorns__._ _Disclosure: NBCUniversal and Comcast Ventures are investors in __Acorns__._