Cramer's 'Mad Money' Recap: How to Build Long-Term Wealth

The Value of Diversification

After taking care of the "necessities," Cramer told viewers they need to prepare for retirement. He said it isn't enough to just mindlessly save money into a 401k plan.

Preparing for retirement should include more than just a payroll deduction. Cramer told they need to stay diversified and play an active role in the management of their savings plans.

"Don't use your 401k to buy shares of your employer," he said. While investing in one's employer stock may offer some piece of mind, it's the biggest mistake investors make.

He reminded viewers of those who invested in the former Enron. "Those people lost their job and their retirement. It's lose, lose," he said.

"Diversification comes before everything else when you're investing," he said.

Investing for Retirement

Cramer reminded viewers that they should be investing in their retirement and not just saving for it.

Cramer noted it's not uncommon for investors to be risk adverse when it comes to their retirement savings. Given how important retirement savings are, and the inherent race against time, he said it's only natural for investors to shy away from risk. But, he cautioned, "it's not enough to just get a 4% return from bonds."

Another common 401K investment mistake is to put money in a stable-value type of mutual fund. These funds, he said, not only do not generate wealth but barely keep up with inflation. He recommended S&P 500 index funds as a better proxy for the market's high-quality names. These stocks, he noted, are the best performing asset class over any 20-year period.