>> if you don't enunciate, it could be a problem. >> remember, we talked about that it got me thinking, b.k., union pacific, in the rails, trinity industries comes out trn. >> you're trucking it? >> uh-huh. >> see you back rehe tomorrow ae "mad money" with jim cramer starts right now my mission is simple -- to make you money i'm here to level the playing field for all investors. there's always a bull market somewhere. and i promise to help you find it "mad money" starts now hey, i'm cramer. welcome to "mad money. welcome to cramerica other people want to make friends. i'm just trying to make you some money. my job isn't just to entertain but to teach you call me at 1-800-743-cnbc. or, of course, tweet me @jimcramer anybody who has a high school diploma has almost certainly taken a course in geometry, some

miss seconds a physics and have a deep understanding of quantum physics but you know the one thing they almost never teach you in high school let alone touch with a ten-foot pole in college, financial literacy and i'm not talking about economics here, you could be an ecom major and not learn anything about retirement readiness, let alone how to invest wisely money is just not talked about in education it's like the third rail of the whole educational system and that's why i am on a constant mission to teach you every aspect so you'll be able to become a better investor when it comes to retirement investing and playing around with what i call your discretionary mad money portfolio. which is a big reason why i wrote "get rich carefully" to begin with if you don't own stocks directly you probably have some exposure,

a 401(k) plan which is why i want to take a moment to talk about retirement to are those living in a cave for the last 20 years 401(k) plans are the main way to save offered by your employer and tax deferred vehicle including the i.r.a., wait, for those who are about to fall asleep or change the channel, because the whole idea of saving for retirement puts you to sleep. hear me out. you need to know this stuff. i will tell you some things you won't hear from the so-called experts. this show is different at this point it's pretty much become conventional wisdom you have to invest in your 401(k). that only an idiot would not contribute to a income plan. a lot of experts will tell you to max it out if you make enough to be feasible the maximum tends to go up from $17,500 to 18,000 and those come from pretax income

however, i am not one of those people who think you should max out on your 401(k) i'm not someone who will sing the praises of the 401(k) and tell you it's the key to your value says the truth is 401(k) plans can be a real mixed bag >> boo >> with a couple of really great features and a lot of bad ones and those bad futures will eat away at returns through fees that are hidden from you that actually are quite upsetting to me so let me lay out the good, the bad and the lug and whether it makes sense to contribute more to your own 401(k) or maybe put that cash in a better place somewhere else first the good the best thing about a 401(k) is it's a tax deferred investment vehicle and pay no taxes on what you put in and never pay of -- any capital gains. decade after decade, totally tax free until you start making withdrawals. regular viewers and readers of

meyer books know i'm a huge believer in compounding. give you an example. suppose you're 30 and start investing $5,000 a year to your 401(k) and, remember, you're not paying any income tax on that 5,000, pretax income if you choose your investments widely you should be able to generate as much as a 7% return on average so over the course of the next 30 years you'll be contributing 150,000 to your 401(k) but because that's able to compound year after year without any capital gains taxes by the time you're 60 that $5,000, well, that could be worth over $511,000. if you had to pay taxes on dividends and capital gains that would be much -- would be a lot lower, perhaps as much as $110,000 that's how important compounding is and the tax deferred nature. you only have to pay faxes on it once when you withdraw it. at that point it's ordinary income and since you're likely

retired by then most will end up paying a lower rate than when you were taxed at it earlier that's one major reason to like them second, many but not all employers will match or partially match your contributions. for every dollar you invest in your 401(k) plan your employer might throw in 50 cents up to a certain point. free money, you almost never want to walk away from free money when it's untaxed. but if you don't get free money from your employer for contributing to your 401(k) i think it's a much less compelling option because as i said before there are a lot of things about a 401(k) plan that can be really bad. which is why if again you don't get a match from your employer i believe it's a better idea to save for retirement via the individual retirement account or i.r.a. with the same tax favored status you can only contribute $5500 to it but if you change jobs you can roll that over and that's

what you should you do every time you switch employers. 401(k) plans vary widely and some have a terrific amount of options but many give you a 401(k) plan with limited omgs and sometimes you only choose between a dozen at most mutual funds. for those who can't pick your own stocks my number one rule is that before you contribute money to your 401(k) plan, you have to make sure it gives you the option to put your cash into something that's actually worth investing in or make this simple can't pick your own stocks in a 401(k) you want a nice low expense index fund that mimics the s&p 500. if your 401(k) doesn't even offer that shame on you but, well, shame on your company, go with a self-directed i.r.a. from a full service discount broker, like fidelity so you can have control over your money. one more negative, within a 401(k) when you invest in a mutual fund you have to pay that

mutual fund's fees really important but your 401(k) administrator, the company -- the people your employer hires to run the plans will also charge fees. >> boo >> meaning that all the money the 401(k) saves you on taxes, a great deal with be clawed back by these fees. if you ever looked at your statement and wonder why your holdings aren't increasing like they should be, fees are probably the reason. so where does all this leave us? here's my bottom line on retirement investing, the company you work to offers an employer match for your 401(k) contributions put money into it until that match is maxed out. no reason to pass up on free money. put any additional save noogz an i.r.a. no employer match or an employer match but your 401(k) doesn't give you options worth investing if you would do better to skip the 401(k) and go straight to an i.r.a. immediately deborah in california, deborah >> caller: hi, jim thanks for taking my call. >> quite welcome.

>> i have a two-part question regarding the value of listening to a company's earnings conference call. >> okay. >> caller: the first part is, how can we decide what we want to do, in other words, what action we want to take based on the earnings report since the stock frequently will behave in a contradictory fashion to the report for example, a company can report good earnings but guide lower on the revenue and earnings going forward and the stock will go up the second where you might think it should go down, right the second part of my question is, i'm on the west coast, so the calls frequently are at 7:00 and 8:00 a.m. eastern time so for me the value of listening to the call is diminished because i'm not going to get up at 4:00 or 5:00 a.m. to listen to it so i'm not really going to take any action. >> here's the solution to this you have no gun to your head

unlike the hedge funds you can listen at your leisure i'm not trying to get anybody buy a stock ahead of a quarter take a longer term view in the comfort of your own house and go read it or yahoo! finance and get some research, street.com, cnbc, get some research, match the expectations with what was said, take a longer term view. that's the advantage of the individual investor. you don't have to play that way. doug in nevada, doug >> caller: boo-yah, mr. k. my question is, i have a 401, it's very substantial. would it be advisable for me to change that to an self-directed i.r.a. >> caller: okay, what matters is the match.

if the employer is matching, no, okay you want to get the max -- you want to get the max match, so to speak then after that, yes, or -- but if it's 6 1/2 or 1 1/2 dozen of the other and the funds aren't that good that you're allowed to be in, then, yes, choose a self-directed i.r.a let me help you take control of your financial future h it comes to retirement if your company matches your contribution then max that out but if you don't get that or don't have investable options go straight to the i.r.a. on "mad" got your diploma, don't miss this. too busy to invest in individual stocks i'll help you put your money behind the next best thing many roads to a healthy retireme retirement don't miss a second of "mad money. follow on twitter. have a question, tweet him

#madtweets send an email at madmoney@cnbc.com or give us a call at 1-800-743-cnbc miss something head to madmoney.cnbc.com. you always pay your insurance on time.

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if everyone in this country went insane and decided to turn american into cramerica with me as your king, you better believe i'd be making changes and changes pronto but because this is a show about money i'm going

to stick to the financial elements of the cramer regime because the fact is it drives me nuts we don't teach our young people to handle money, early, not just college would it be so crazy if you had to take a class before you graduated? i think it should be mandatory those awkward health classes that can get graphic at times, now sadly i am nobody's dictator and don't have influence over educational policy but do control what we talk about can i speak some words we believe but rarely get to say in conversation look, money is important it's really important. and caring about the state of your finances does not make you some kind of superficial monster. if you have a bad credit score, you get married. congratulations, you just put that on your new spouse. neither of you will be able to qualify to get a new car or get a credit card. these things matter in life.

they say money can't buy happiness but i've often found that cliched wisdom to be dubious at best because being broke is a buzzkill since i spent time living in my 1978 ford fairmont. i wish i had an expert way back then one of the most important questions out there, what the heck should young people do with their money? first and foremost and always you need to invest that's the only way you'll be able to achieve financial freedom and by freedom, living a life where you're not totally 100% dependent on your paycheck. i'm thrilled charge i see members who are taking an active hand in managing their own money. too many start saving and investing way too late that makes their lives more difficult than they need to be many young people feel like they have all the time in the world, many more start investing before they're truly ready when they

are in fact better things for them to be doing stuff with their money so got to really drill down this. it's why i'll give you three lessons and caveat for those recently out of colleges let's start with the caveat. before you can start investing you need to pay off your credit card debt. this is something i mentioned before but it's especially true for younger people since companies have gotten aggressive about offering credit to college student, no matter how much money you rack up in the stock market if you're carrying a balance in your credit cars it will eat into your returns i know this firsthand. long term the interest on those cards will probably be greater than the profits can you make from investing so just pay your darn credit card balance in full automate it with your credit card company you'll be tempted not to i can't defeat that credit card debt with -- no matter how great stockideas i have. three lessons, first this, is really for all young people who have recently graduated and for everyone out there regardless of

age, you need to save money. not everybody has a predisposition to save i also acknowledge that just telling you to save over and over again won't necessarily do any good however, the stock market is a great way to trick yourself into saving a part of your paycheck you might otherwise spend. investing in stocks can actually be a lot of fun. we try that on the show. we try to do some entertainment within the teaching whereas leaving money in a savings account just feels like kind of joyless for a lot of people. not to mention the fact that the returns are so small they're basically, yes, indeed i'll use the word meaningless if you invest your savings in the market it will be easier to resist the temptation to spend that money on things that you might not need because it will be sit until stocks that you'll like enough to say -- you have to sell those stocks to get your money back and there's a natural predilection to not sell once you buy.

i the smartest place to put your money right now. traditional saving vehicles like money market funds, you see those funds. cds hardly give you any returns at all a waste when cash could make a lot more money by owning stocks in a brokerage account and get your hands dirty with your money. second investor, this is much more targeted piece of advice. while you're still young you can afford to take a lot more risks than an old fogy like myself you can get away with riskier or more reckless strategies like owning more speck tiff single stocks but so is the potential downside or playing with options and being aggressive with your money. why is that? it's not because young people are naturally better speculators. not at all it's because when you make a mistake in your 20s with your money, yeah, you have the whole rest of your life to fix it. can you afford to buy more high risk stocks when you're young because you have 40 odd careers

to earn back losses. older investors, you have to be more cautious. the closer you are to retirement the more conservative have you to be. more bonds, more high yield stocks, fewer speculative stocks in the single digits forget about bonds, please, if you're young, there's no one in your 20s to have bond exposure when you could invest in stocks which will make you a higher yield. take this advice to heart because i suspect that the recent college grads most likely to invest in the market are also the ones who are the most responsible, the most prudent about their money. and prudence is great when you're putting together a budget to live with or deciding how much of your paycheck to save every month. for young investors, being too prudent is actually being reckless 20-something, live a little in your stock portfolios. take some risks. forget about bonds for the next

decade maybe some tiny biotech companies with a lot of potential. even if they blow up on you and go all the way to zero, you got your whole life to make that money back final lesson, it's never too early to start investing for retirement make sure 401(k) -- put money in a roth i.r.a here's the bottom line, for young people just out of college, invest something a great way to trick yourself into saving money you might otherwise spend that money. with beyond that remember when you're young you can take more risks and it's never too soon to start contributing to your 401(k) or i.r.a. especially if that i.r.a. is a roth. let's go to mike in tennessee. mike >> caller: hey, jim. how are you doing? love your show we watch it all the time. >> thank you >> caller: my question is, a few episodes ago you said you did not like buying a stock if the peg ratio got above 2. >> right. >> caller: i'm wondering whether

or not you use those ratios as a sell signal and if you do how high will you let it go before you pull the trigger and sell? >> when it's more than two times the growth rate i do get nervous. now, there are some stocks that don't trade on earnings and you've got to be careful like a colt stock but the typical stock if it trades for lower, great, lower than two times that rate of growth, i'm fine with it but it is a red flag once it gets higher a penny saved is a penny earned. investing is a great way to trick yourself into saving money. never too early to invest in your 401(k) or i.r.a pros and cons of index funds which way do i come out? then income is a big factor in choosing your retirement path. plus, i wouldn't wish student debt on my worst enemy i'll help you protect your family from this expensive burden -omar, look. [ thunder rumbles ]

omar, check this out. uh, yeah, i was calling to see if you do laser hair removal. for men. notice that my hips are off the ground. [ engine revving ] and then, i'm gonna pike my hips back into downward dog. [ rhythmic tapping ] hey, the rain stopped. -a bad day on the road still beats a good one off it. -tell me about that dental procedure again! -i can still taste it in my mouth! -progressive helps keep you out there.

we live in a world where you have more choices about where to investor than ever before. a virtual infinity of etfs, mutual funds, you name it. sometimes having more options makes it impossible to indict

which are right and which are wrong for you. and you've never had more options when it comes to picking exchange traded funds and mutual funds than you do right now. they're everywhere at this point there are so many different kinds of etfs it can make your head spin. i hate how many of the ones that let you buy and sell an entire group like home builders, i hate the way they warp the way the stock market trades. you can find out more in my book i have to urge you to find out about them if you're in them the important thing is this, you have all sorts of mutual funds out there and they can advertise. the companies that run them want your money and one of the biggest mistakes can you make as an individual investor is to give it to them with a few significant exceptions unfortunately this is also one of the most common money mistakes out there people equate investing with putting in mutual funds.

80% of the households have exposure to them a lot of 401(k) don't want to you pick individual stocks they just give you a men knew of mutual funds to choose from. that's one reason all else being equal an i.r.a. is a better way to invest for you. what exactly is so bad about most mutual funds? why am i railing against something an institution in this country? if you're investing in them you're most likely, you're getting hosed. i don't want to paint with too broad a brush. there are some worthwhile ones but first you need to understand the problem with the mutual fund model. with active managed mutual funds where there are people deciding which stocks or other securities to buy and sell we have some problems unlike hedge funds, mutual fund managers don't get paid for delivery or performance but collect fees from people like

you and the amount they make is their aum, we call it. which means their biggest incentive is not to do well, but what they're really being paid to do is bring in more money for more investors salespeople for their funds. that's part of the reason why year after year it's been shown the vast majority of actively mute walling fu mutu mutual funds underperform. its performance will most likely fall short even though actively managed funds consistently underperform they have some of the highest fees in the business how do you like that they don't do as well as the benchmark and charge more. >> boo >> even if your fund does manage to beat the benchmarks the odds are good it could be eaten up by

big management fees and end up with an underperforming stock. there are some funds with fabulous managers who consistently deliver terrific results and i'll tell you how to find them another time the trouble is when a fund delivers such great results for so long if the manager is a decent person they'll stop accepting new investments, put their foot down. at a certain point when it becomes too big it is hard to beat the market. as a general rule if you invest in mutual funds don't want to be in an actively managed one. the fees are too high and the evidence the bulk of them underperform is too staggering to keep going that way you know that i think your best strategy is manage your own portfolio of individual stocks that's what i talk about night after night. for those who don't have the time to research individual companies or if your 401(k) plan just won't let you own them let me tell you is the smart way to invest in mutual funds, you want you can write this down. a cheap low cost index fund that

mirrors the market as a whole, one that minimum ins the s&p 500, index funds have ultra low fees and with an s&p index fund have you a vehicle that will let you participate in the strength of the stock market without having to pick individual stocks now this may sound like a simple solution overdon't think it the whole point of putting it in a fund is save you time and effort to manage your own portfolio stocks it's insane when people own multiple mig multiple mutual funds. there are sector based ones and etfs out there no reason for you to have exposure to them if you play individual sectors, that time would be much better spent picking individual stocks. as for etfs in most cases they are for trading, not investing so i don't like them many etfs rebalance every day and can take a toll on any long-term performance. they're not set up for long-term

performance. the one for gold but in general if you're not a pro and you're not day trading you shouldn't be fooling around with etfs either. here's the bottom line at the end of the day i think a cheap one is the least bad way to manage your money better than the vast bulk of mutual funds but index fund owns everything, the good, the bad and ugly if you do have the time i think can you beat the performance of an index fund by mixing stocks yourself which is the entire reason i do the show every night. if you don't have the time then don't overthink it just one cheap s&p index fund is, indeed, the best way to go mary in maryland, mary >> caller: boo-yah, jim. jim, i started listening to you a while back then i started buying stocks on your advice >> thank you. >> caller: now i'm looking at my portfolio here and, jim, jim,

mine eyes have seen the glory so i want to get fancier and buy some china stocks however i'm curious about adrs and possible exposure to foreign currency exchange rates so, can you edu-cramer us on those? >> we have the battle hymn of the republic overseas. if you want to own individual stocks and the businesses are good i don't care where they are or the currency if the business is that great. the stock will go higher but understand if you're buying an adr and european company, for instance, say and the euro is weakened by central bank issues you will not do well even if the stock does well so all things being neutral and don't have a country or continent trying to debase their currency, i'm fine. if they are stay in the good old

usa which is a smart way to invest matthew in new york, matthew >> caller: boo-yah jim. >> boo-yah back at you. >> caller: i'm 23 years old. recent college grad and new to the workforce and just started and maxed out my i.r.a time is on my site and want to go for an aggressive allocation but unsure how to do it. i want to get your suggestions for someone starting out doing retirement investment. >> i think that, you know, you want to have fastest young growth stocks and those are -- tend to be found in technology sector, but also, of course, in biotech. don't go too crazy i'll have one or two stocks out of companies that aren't making money, no more than that but those are the most fertile areas. junior growth stock, companies that are worth a billion dollars or less, a lot are too small to talk b. one of those too

these are all fine can you do those because if you lose money you got the rest of your life to make it back. sorry, not so much mutual love here picking stocks still the best way to manage your money if you don't have time just please, please, please go with the cheap s&p 500 fund over most actively managed funds how to find the best path to a healthy retirement depending on income don't forget the kids. protect them from student loan debt and puts them in a better way to build their future. plus, i'm responding to tweets without the 140-character restriction. it so hems me in stick with cramer. >> caller: jim cramer, you're one of my heroes. >> i watch it every weeknight. >> thank you very much for helping beginning investors like me. >> caller: when you talk about the markets, i just believe that you're spot-on >> caller: i love it thank you very much. every night we watch you

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i grew up in the forests out in this area and honestly it's heartbreaking to see all these trees dying. what guides me is ensuring that the public is going to be safer and that these forests can be sustained and enjoyed by the community in the future. today, life-changing technology from abbott is helping hunt them down at their source. because the faster we can identify new viruses, the faster we can get to stopping them. the most personal technology, is technology with the power to change your life. life. to the fullest. let me tell you about whether it maybes sense to use a regular 401(k) or an i.r.a. or

for you to go with a roth which is a term you've heard countless times. i've talked to you about the benefits of an individual retirement account and 401(k) plan to invest for retirement. i won't beat a dead horse this is a subject i get a ton of questions about. should i put my money in a roth account or a regular one so why don't we start with a roth aside from the earned income tax credit, the roth i.r.a. may be the single greatest thing the government has done for us to end the war on poverty poverty possibly winning on points how regular i.r.a. lets you take pretax income and invest it then gains can compound year after year totally tax free until you withdraw that money when you retire a roth i.r.a. works differently. with a roth you make contributions with after tax income so in other words unlike a regular i.r.a. put nothiing ia

roth won't decrease your tax free you will never pay taxes on it again. as long as cash remains in the account you don't pay capital gains tax and when withdraw it which you can do without penalty after the age of 59 1/2, you don't pay any income tax on your withdrawals. this is fabulous in other words, with a roth you pay taxes now so that you don't have to pay income tax 30 or 40 years from now when you're retired. there is one more positive point about it you can withdraw the money you invested, not your gain, just the amount you contributed and won't get hit with a 10% penalty which is what happens with a regular i.r.a. when you hit 59 1/2 that's different from a regular i.r.a. you don't pay on contributions now and gains don't get taxed but once you start withdrawing every money you take out is taxed as ordinary income which can be a high rate

which means that when you're trying to decide between a roth i.r.a. or 401(k) and a regular i.r.a. or 401(k), you're basically decide wlg it makes more tense to say income tax now or once you retired. in other words, you have to figure out whether you'll be in the higher tax bracket after you've retired or lower one. obviously this is a complicated question and has a lot to do with the specifics of your situation, your career and how old you are. quick rule of thumb. for anyone's tax rate is 25% or less i think you ought to go with a roth. better to take the hit up front than allow your roth i.r.a. to compound tax-free for the rest of your life for those who don't have the time to pick your own diversified portfolio, smartest thing is park your money in a low cost index fund that mirrors the s&p 500. as you get older you can add bonds but really until you actually retire stocks should make up the majority of your retirement investments i know i said it before. i'll keep repeating it because

it's so necessary. but it's contrary to conventional wisdom i want stocks not bonds until later how about a roth 401(k)? this works just like a roth i.r.a. you make contributions and never pay taxes on that again except because it's a 401(k) plan it has a much higher contribution limit. the government says the 401(k) contribution limit for 2015 is $18,000. whereas an i.r.a. annual contribution is capped at a mere $5,500 and there's one other difference unlike a roth i.r.a., a roth 401(k) doesn't have income cap no matter how much you earn you can take advantage of it as long as your employer gives you an option what do you think the future will look like if you think tacks are headed higher, then a roth 401(k) where you pay your taxes now and pay nothing in the future that is so the way to go even if you're making a lot of money in the present. but i think that belief is mistaken

for those who have become politically conscious under the obama administration it may seem like there's no way to stop the tide of higher taxes i believe we can close the deficit without substantially raising taxes, about as political i'll get on this show. at the end of the day this is beyond our control and beyond our ability to predict the bottom line, the lower your present income the lower your taxes. roth 401(k) or roth i.r.a. lets you pay low rates now and never worry about taxes again for your retirement money so the less you make the more likely it is that a roth is for you. it's that simple and when you are a saving for retirement don't worry about what could go catastrophically wrong 30 or 40 years in the future just worry about making the best choices right now. "mad money" is back after the break. >> caller: cramer, you are super. you are awesome. >> caller: i'm a first time investor. >> caller: thank you for inspiring me to get in the game. >> caller: your show is the

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lately i've been reading stories about the crushing burden of student loan debt. right now tens of millions of americans ee more than a trillion dollars in student debt that's an incredibly high figure and it's not just that it really stinks to graduate from college or graduate school and immediately realize it might take decades to pay back loans in study after study kids who graduate with no debt end up being worth a lot more money than their classmates who have outstanding student loans. i'm in a big believer sociin so mobile and i want you to help use it to make some serious money. so for any of you who are parents or are thinking of becoming parents let me just tell you right now that there are very few things can you do for your children that are better than paying for as much of their college education as you can afford

we know that college graduates have a much easier time getting jobs where unemployment is way too high and know they ultimately make more money of course if i were making a style, i would tell you it's more important to save and invest for retirement. for those who are parents, how could your own retirement possibly be more important than making sure your kids have the best future possible simple if you reach retirement age and don't have enough to pay for your kids who will support you your kids. you don't want to be a burden on them so take care of yourselves first. however, after you saved enough for retirement then it's time to start thinking about college even if your kid is only a to the -- toddler best ways to save is a a29 pl52.

two kinds, for some states lets you use a 529 at a wedge to hedge against tuition inflation by buying tuition credits at today's prices that can be used in the future. that's not what i'm talking about, though. i want you to use a 529 savings plan again, these are run by the states an rules differ from state to state a 529 doesn't let you manage your own portfolio you have 0 pick between a mix of different mutual funds just like with many 401(k) plans h is really not my favorite way to do things i prefer you to have control of your assets in the selection of which stocks to buy or which financial -- which actual instruments, okay, but 529s have so much going for them i'll swallow this one flaw remember when you can only choose between funds go for a low cost fund that mirrors of market either the s&p 500 or something like the vanguard total market fund which is you'll see in many of these 529 plans literally owns all the stocks traded in

the new york stock exchange. since it weighted by market cap performance will be similar to the s&p so what are the rules for this plan? let's say you just had your first child. congratulations. mrs. ms. you should start a a29 right then and right there well, maybe add a couple of days -- if you just had a baby i traded big blocks of alcoa throughout the birthing and not one of my finest moments contributions are not tax deductible so paying for this out of after-tax income. not so great here's the good part yuns your money in the 529 you don't pay any taxes on gains so let them compound tax free year after year it's a lot like a roth i.r.a. except for college rather than retirement because of federal gift tax laws can you only contribute $14,000 a year if you're single, $28,000 if you're married and you file your taxes jointly still that's a heck of a lot of money when you think about it by the way your children's

grandparents can contribute to the same 529 plan too. if you don't have the money a grandparent can start a 529 with your kid as the beneficiary although for financial aid reasons bet story have a parent do it. now, let's say for some reason you or your parents are sitting on a really huge sum of money. one of the cool things about a 529 plan you can front load five years' worth of contributions without incurring the federal gift tax as long as you don't write they checks to the plan's beneficiary over the next five years. a single parent or grandparent could invest $70,000 right from the start or if you're married and file jointly you can contribute $140,000. for the next five years after thaw won't be able to contribute anything without getting hit by the gift tax but once you drop that money into a 529 you won't need to make too many more contributions. the key here, though, is thaw want to get that money into your kid's 529 as early as possible that's because the greatest of these plans is all about the power of compounding

remember, you don't pay taxes within 529 so if you can somehow contrive to contribute $70,000 right off the bat and invest that money in a low cost index fund the rule of thumb is over time you'll make an average of roughly 8% per year. i know the stock market is actually a lot more volatile but just as a thought experiment if stocks generally perform like they have historically you could double your investment in about nine years so if you start saving right when your kid is born by the time he or she is 189 value will have double and doubled again. if you started with $70,000 and after 18 years barring some kind of -- ka ka tass front loading e best strategy your 529

contributions won't count towards estate tax for grandparents any money in a 529 plan you don't use can transfer to sibling, parents, first cousins. if your kid decides not to go to college you can withdraw the money in the 529 plan but you have to pay taxes on any of your gains along with a 10% penalty so here's the bottom line. no paying for your kid's college education isn't as important financially as providing for yourself in retirement but if you have children, then after you've made enough retirement contributions for the year putting money in a 529 savings plan should be the next item on your agenda. the best way to protect your kids from the crushing burden of student loan debt. "mad money" is back after the break. for your heart...

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holy cow we got to get to some of your tweets you've been sending me @jimcramer, #madtweets kevin tweets i love you, jim i love you, ken egan some call me jack tatum. no, i'm a sweet green. john wants to know why care about short hit if you have long-term investment strategy? amen how many times have i said i like x, y, z stock it goes down that day and people want to burn me in effigy or in calling oil

it doesn't have to be that day think longer term. here we have @diego who wants to know aside from your own what other books should investors have to help them trade/manage better #madtweetsgetaplan "beat the street," peter lynch available on amazon, "one up on wall street. you want to look at those books to learn a great deal. he taught me a lot at goldman sachs but moved on david dark's books are good. @drhoi 480 do you ever sleep or did your biotech give you clones to assist i don't sleep. okay now we've answered that. now, btw which i think stands for by the way i'm now following

you know what you own mod to or kwyo cleaned my portfolio this week yo, lo, wolo you only live once so i totally agree with you i'm in the market because of you, sir just give all the haters a big boo-yah. keep teaching us what they want to grow. jim. let me give you a little heads-up i love the haters. i wouldn't be doing this if it weren't for them i would have gotten out years ago. i'm a spiteful-driven guy to the haters and everyone in my personal life knows that so haters, you're why i'm in this game congratulations and stick with cramer

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i like to say there's always a bull market somewhere and i promise to try to find it right for you on "mad money. i'm jim cramer and i'll see you next time. ylon pierce loves to .

this guy was rolling deep in scottsdale, in tony nightclubs, tony bars, going to strip clubs. narrator: and a government ankle bracelet doesn't slow him down. it was like a superstar. everybody knew him. he was greedy in every sense of the word "greed." narrator: this casanova con man convinces women that he's a wildly successful stockbroker. daylon could sell someone a nickel for a dollar. narrator: he looks like the perfect catch. blake: he drove the nice car, he had the nice luxury condo. the truth was, he had spent the previous decade in prison. narrator: and this charming ex-con has