This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Cramer's 'Mad Money' Recap: How to Gain From the Long-Term Game

Retirement Investing

In the long run we all retire, which is why retirement planning is a big part of long-term investing, said Cramer. But what is retirement investing? Conventional wisdom has always told us that we have to invest in our 401(k)s and have to invest in an IRA. But beyond that, conventional wisdom has always been a little fuzzy.

Cramer said the promise of 401(k)s and IRAs is their tax-free status would allow higher returns over the decades. In reality, most 401(k) plans just stink, said Cramer, thanks to their high fees and severely limited choices.

Ideally, investors should have a portfolio of five to 10 diversified stocks, said Cramer, but most 401(k) plans only offer mutual funds and bond funds. That's why Cramer advocated contributing in 401(k)s only to achieve any company match, then stop.

Beyond a 401(k), Cramer said investors need to contribute to an IRA, up to the maximum of $5,000 for 2012, or $6,000 if you're over age 50. What should you keep in this IRA? Cramer said investors ideally want high-yielding, dividend-paying safety stocks. But here, too, there is a caveat.

Cramer said investors need to steer clear of master limited partnerships, MLPs, or real estate investment trusts, REITs, in their IRAs. Own too many, he said, and you could end up paying higher taxes than if you purchased the stocks in a regular brokerage account.

Look for Secular Growth Stocks

While there's no such thing as a stock you can own forever, some winners do last longer than others, Cramer told viewers. Those winners are called secular growth stocks.

Cramer explained that most companies need a healthy economy to do well -- those are called cyclical stocks. But secular growers do well year after year, regardless of the economy. The key to finding these names is to look for the "big picture" themes.

One such theme has been the recent move towards healthy eating, explained Cramer, something that's helped propel stocks including Whole Foods Markets (WFM) and Hain Celestial Group (HAIN) for years.

But even secular stocks can have a shelf life, cautioned Cramer. A few years ago, Cramer was talking up the "mobile Internet tsunami," the transition from feature-phones to smartphones that would rake in billions for all those involved. But as the smartphone revolution took hold, it quickly became an Apple (AAPL) tsunami, disproving the theory that a rising tide lifts all boats.
3 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $94.19 -1.04%
FB $118.06 0.54%
GOOG $695.81 0.50%
TSLA $222.56 -4.20%
YHOO $35.97 -0.11%


Chart of I:DJI
DOW 17,651.26 -99.65 -0.56%
S&P 500 2,051.12 -12.25 -0.59%
NASDAQ 4,725.6390 -37.5850 -0.79%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs