Cramer also advocated his strategy of "playing with the house's money." He said by taking out your initial investment and leaving only the gains, investors can take more risks with what's left. That's the Holy Grail of investing, he concluded, because at that point you simply can't lose.
How to Invest for Retirement
A huge part of long-term investing is investing for retirement, said Cramer. But like all things, there's a right way and a wrong way to approach one's golden years.
Cramer said that conventional wisdom says to simply park all your money into a 401(k) or IRA. While these types of accounts do have many tax advantages, unfortunately most 401(k)s offer options that, well, stink. That's why Cramer suggested investing in 401(k)s only to max out the company match, if there is one, and then into an IRA until those limits are reached.
What should investors have in those IRAs? Cramer said he recommends five to 10 diversified stocks, including high-yielding names that are not master limited partnerships (MLPs) or real estate investment trusts (REITs). He said both MLPs and REITs are already tax-advantaged investments, thus putting them into IRAs invokes additional tax implications that can wipe out any gains.
Instead, Cramer said he's looking for regular companies with great yields and long track records of raising their payouts year after year.
Stocks for Every Portfolio
Some winners are more lasting than others. That was Cramer's next lesson for investors. He said while no stock lasts forever, there are a select few secular growth names that should be in every portfolio.
Cramer explained that most companies need a healthy economy in order to thrive, and that's called cyclical growth. But secular growers can deliver fantastic earnings even in a lousy economy and keep powering higher year after year.
How can investors find these elusive winners? Cramer said by sticking with long-term trends, like the move towards healthy eating. That trend has worked well for names such as
, said Cramer, just as the smartphone revolution gave
years and years of unparalleled growth.
Cramer said that investors can hold onto secular growers for as long as the story remains intact. That can be a very long time, he added. But investors need to realize that even the hottest of trends, like Apple, will eventually come to an end and investors need to be prepared for it when it comes.
What's in a Name?
Cramer's final thought for investors: Don't get hung up on nomenclature. He said there's nothing virtuous about being a "long-term" investor.
In recent years, the notion of trading has become loaded with negativity, but in the end we're all here to make money. If that money happens to come in a hurry rather than taking the years you were expecting, take it!
When you go to the bank, they don't ask whether you made your money short term or long term, they take it either way. If you you need to take action with your investments on a more frequent basis, do so.
Just always remember to stick with your discipline, do your homework and stay on top of your portfolio, he concluded.
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-- Written by Scott Rutt in Washington, D.C.
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