Cramer recently noted that for 401k investors who are “serious about getting rich,” it means preparing for retirement—regardless of age.
“Notice I didn’t say save for retirement,” he explained. “I said prepare, because just stuffing your money in the first national bank of Sealy, a.k.a. stuffing it into your mattress, or automatically saving it into an IRA or 401(k), great though those two tax-deferred vehicles may be, might not be enough to prepare for your retirement.”
His advice fits with suggestions from certain experts to position the 401k as a retirement income distribution vehicles, rather than a tool to help employees “save for retirement.” It could be a relatively simple, yet massive, key to industry, advisor and retiree success.
Reflecting the insight gained, yet largely ignored, by investors after the now-legendary Enron debacle, Cramer wisely suggested that 401k participants not use much of their 401k funds to buy stock in the companies that employ them.
“One of the key components to investing is diversification,” CNBC said of the advice. “Otherwise, too much of a portfolio could be exposed to the same sector, which could introduce an enormous amount of risk. That is why Cramer said investing retirement money into the same company that pays a salary is not a good idea. That is like putting savings into the same basket as a paycheck.
“You probably feel like you understand the company that you work for, and the excuse is that you’re investing in what you know. I’m telling you, that excuse doesn’t cut it,” Cramer added.
Dykstra is the ex-professional baseball player nicknamed “Nails” who went to prison for bankruptcy fraud, having also been accused of grand theft auto and money laundering before accepting a plea agreement.