>> friday with carter worth, wasn't it great to have carter on the desk? >> slow clap >> psx and earnings on april 30th, melissa. >> that does it for you. see you back here tomorrow at ad00 "m money" more "fast 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 people want to make friends, i'm just trying to save you money. my job is not just to educate you but it's to teach you. call me or tweet me. every night i come out here four two big reasons. i like the attention the second and more important reason is i want to help you

build and preserve your wealth we live in a world where it's increasingly difficult to become rich if you weren't born that way, and love it or hate it, i believe that the stock market is the best ladder we have in this country for social mobility. there are millions upon millions of people in this country but there simply aren't that many jobs that pay you a salary fat enough to actually make it rich. even if you're a total cheap skate and save nearly every single penny you earn. the truth is, if you want to become really wealthy in this country, unless you're born with a silver spoon in your mouth, that means planning your financial strategy for life even if you don't have a super high paying job as long as you can save a deep chunk of your paycheck and invest it, you can make your wealth grow to the point where you become if not filthy rich, then at least, very least, financially independent meek you don't need to worry about your job security or where your next paycheck is going to come from. you can retire without worrying

about social security, which may not even be around when some of our younger viewers hit retirement age that's why tonight i want to help you figure out the best way to manage your money in order to help achieve real financial independence. >> house of pleasure. >> but in order to do that, we need to talk about the concept of generational investing because the kinds of strategies that make sense when you're young in your 20s are very different from the sort of things you should be doing when you're middle age or senior citizen for that matter. we don't talk about that enough on "mad money. tonight is different there's one constant when it comes to managing your finances, no matter how old you are. you will never get a better opportunity to get your money to work for you than by investing in the stock market. even when we're in the bear market and it feels like stocks go down every single day, when you take a long term view it's easy to see the stock market is

by far the most effective method of wealth creation it might go down for months or years. it might crash like it does upon occasion but if you take the long view, the very long view, stocks tend to go higher i don't say that as some sort of polyana. when i got started in the business in the early 1980s the dow jones industrial average was trading in the 800s and despite multiple bear markets between then and now the dow currently stands what you might call well above that mark, right that represents a pretty fantastic amount of wealth creation and that's why i'm so adamant that no matter how old you are, no matter how wealthy you are, you should have some money socked away in this, the stock market for those of you that are concerned that it's rigged, dangerous, unsafe a place to trust your savings, can i give you some historical perspective right now?

if you go all the way back to 1928, that's right, before the great stock market crash that preceded the great depression, through the end of 2014 the average annual for the s&p 500 is about 10% show me an asset class with a better average return. you can't do it. stocks aren't just the best game in town, they're the only game in town if your goal is to grow your wealth. for some of you who want to get rich quick rather than get rich carefully, see what i did there, that 10% average return for the s&p 500 may not seem like such an impressive number some you are saying thanks for nothing. you're wrong forget the fact that it's more than double what you can expect from a 30 year treasury, deposit, earning next to nothing. let's examine that 10% figure in absolute terms when you're taking a long-term view, which is what we're doing tonight, meaning planning for your entire lifetime, racking up

10% return from a simple inexpensive s&p 500 index fund be which you know i prefer starts to seem pretty darn impressive sure the market is going to have its up years and down years, but over a long enough time frame that 10% figure including dividends has held pretty steady to understand the value of an asset class that gives you a 10% return, you need to view this number through the lens of what's known as compound interest sometimes i'll talk about this as the magic of compounding. think of it like this. if you invest $100 in the s&p 500 and it gains 10% in the first year, then you've got $110 after another year of 10% gains you've got $121. a third year of the same year gives you $133 the gains keep getting larger and larger because each year you're making additional money off the previous year's profits. eventually with a 10% average return you'll double your money in roughly seven years now for those of you who are

really young right out of college, waiting seven years to double your money, i know, seems like an eternity listen, i've got more risky ways of growing your capital faster if you stay tuned. however, the truth is that as you get older an investment that can pretty consistently, you know, take your money up in seven years time and double it, i'll tell you it just becomes pretty incredible. that said, the magic of compounding works best the younger you are because that means you have more time for your money to grow yet, sadly, young people are least likely to be impressed by that steady capital appreciation that's why youth is wasted on the young. let me do my best to make she is numbers sound impressive i'm going to walk you through it suppose you're 22 years old and you're just entering the work force. you've got more than 40 years before you're expented to retire so let's say you invest $10,000 in an s&p 500 index fund right now and let's also suppose that

the next 40 years aren't too different from the last 40 years. in that case if the average return from the s&p 500 holds steady at around 10%, then in four decades your $10,000 investment will turn out to be worth more than $4$450,000 that's enough to send multiple children through college, grad school, pay for a huge chunk of a pretty ritzy retirement and that monster multi-year game, it didn't require any kind of stock picking. it doesn't require you to trade or time the market or even do any sort of research into individual companies which i know is hard for most of you you just need to invest your money in a low cost s&p 500 index fund or etf, there's some commissions there, and then you wait granted you're waiting 40 years, but $450,000 when you're pushing

the age many people retire, it seems very valuable than the initial $10,000 than you made when you were young and had your entire work life ahead of you. so, please, i'm begging you. think of it like this. a little money saved and passively invested in the stock market is the easiest way possible when you're young to turn -- can turn into a massive fortune when you're old and have all sorts of additional costs and responsibilities all you have to do is let it sit on the sidelines, ideally in a 401 k or ira so you don't have to pay capital gains the same logic applies if you're 30, 40, 50 you get a lot more bang for your buck if you start when you're younger. which brings me to the bottom line even if you don't have time to do homework, the stock market is still the best tool out there for growing your wealth and thanks to the magic of compounding, the earlier in your life you start investing in the

market, the bigger your long-term capital gains can be and of course it's like this not just capital gains but also dividends. everything gets reinvested let's go to brenton in new mexico brenton. kvapil jim cramer, big boo-yah from the land of enchantment how are you? >> i'm doing good. >> caller: i'm doing good. general question mutual funds and index fund claim minimizing single stock risk. >> right. >> caller: but inherently though isn't it fair to say that mutual funds and index funds have other risks that you would avoid with a single stock portfolio >> absolutely, and i think that that's why i always suggest that there be two portfolios. there should be that capital preservation and somewhat appreciation fund, that is going to be put that aside for retirement and that should be in a diversified fund, i prefer it to be an index fund

and the rest should be "mad money. a sliver of it though. mad money to pick individual stocks that's why we call the show "mad money. i don't want the bulk of your portfolio in individual stocks there's too much single stock risk but i want you to be able to pick stocks and i know you want to do it or you wouldn't be watching the show. brian in oklahoma. brian. >> caller: thanks for having me. first time investor. how do you -- how do you value a company's -- one company versus another? measure their value? >> well, we spend a lot of time in "get rich carefully" talking about that what you're really trying to do is measure the future earnings stream if you can measure the future earnings stream you can figure out what you'll pay for that now and what really matters is if you take a longer term view you can get a feel for what that stock might give you for dividends and capital gains. dividends tend to be for preservation and then the capital gains is for the appreciation stream. i want you to have a little bit

of both, but you've got to be thinking about what a company can earn in the future that's what dictates stock prices this show is about helping you build and reserve your wealth and the stock market is the best tool out there to do that. a lot more "mad money" ahead including the four letter word of the investing world what it is and why the conventional wisdom about it is all wrong. plus, i'm not pulling any punches here what you absolutely must not be doing in your retirement account, and i'm unveiling the rules you need to navigate the bear market, so stay with cramer don't miss a second of "mad money. follow @jimcramer on twitter have a question? tweet cramer #madtweets. send jim an email to "mad money" @cnbc.com or give us a call at 1-800-743-cnbc miss something head to

madmoney.cnbc.com. and reaches everywhere. this is beyond wifi. this is xfi.

tonight we're talking generational investing, meaning how to handle your finances depending on whether you're old or young or somewhere in

between. as much as many of us might not want to admit it, the rules in this game can be totally different depending on what age you are. nobody would suggest that a retiree pour all of his or her money into high risk speculative stocks that could have either enormous risk up side or go all the way to zero and absolutely wreck your portfolio but just because some of this may sound straightforward doesn't necessarily mean that it's obvious or standard, which is why i'm taking the time to go over the really important differences depending on where you are in your life cycle now i always tell you you need to have two discrete piles of cash retirement portfolio which should be more conservative and then your discretionary mad money portfolio, hence where the name comes from. you can add risks for your money once you've topped out your retirement fund. no matter how tired you are it must come first.

that's what the show is about. the truth is that a bet on your retirement is a bet on your longevity. you want to live for a long time and you shouldn't have to work your fingers to the bone that means planning for retirement from the moment you get your first paycheck. regular viewers here know my rules. no matter who you are, the first $10,000 you invest in the market should go straight into a low cost index fund or etf that mirrors the s&p 500. index funds are fabulous way to get exposure to the stock market's gains without putting in the kind of time or effort that's necessary like what we do around here, picking individual stocks and, hey, if you don't have the time or inclination to pick individual stocks then all of your stock market can come from what mirrors the s&p 500 i'm fine with that there's no reason this needs to be incredibly complicated. it's very important you actually get yourself some exposure to the market because no other asset class can grow your wealth the way equities do. once you save more than $10,000, that means you have enough money

to start a diversified portfolio of five stocks anything less than five stocks in five distinct sectors, you aren't diversified you take that money and invest it in individual companies for your portfolio it's only once you've saved a large enough amount from retirement once you've maxed out your ira and 401k that we start talking about the discretionary portfolio where you can afford to take more risks i want to make this point because a lot of people feel all i want you to be is in individual stocks. that's just wrong. index funds and then individual stocks now when you're younger your retirement portfolio and discretionary portfolio might not lookthat much different. younger people can take more risk than we older guys can't. that's true for a whole host of reasons. when you're in your 20s or 30s, it crushes your portfolio, you have time to make the money back you've lost your whole working life basically you have the whole rest -- years and years and years of

paychecks. however, if you're pushing approaching retirement, you lose a fortune in the stock market, that's a real problem. you have very little time to fix it, which brings me to my first rule of generational investing not only can younger people afford to take risks with their money that older folks can't, but for those of you who are in the younger demographic, it's imperative that you take those risks. you shouldn't go crazy and speculate with all of your savings. that retirement portfolio is off limits but you should absolutely devote some of your mad money portfolio to betting on high risk long shots. i know i'm out there but i believe in this. smaller less well known money with massive up side potential coupled with enormous down side. this is for the younger people biotech stocks which can fly through the roof or even just a piece of positive data on a drug that's years away from hitting the market the

the smaller biotechs will get slammed if there's any negative news the stock will be very difficult to own in more negative markets because they don't have any kind of dividend protection or earnings protection. we're talking about long term investing. looking for good opportunities regardless whether we're in a bull or bear market. why do i incest that younger investors speculate, take risks that might scale older people? because the gains here can be absolutely stunning. and it will be downright foolish to pass up the opportunity to own the winners even if it means picking some losers along the way. when you are in your 20s and 30s invest like a younger person, not like an old man. let me give you an example that sheds light. when "mad money" initially came on the air in 2005, our very first interview was dr. len

schleifer. he was from regeneron. it was a biotech that had been kicking around for 17 years. 17 years without ever really developing anything noteworthy that could move the needle since then though this company has become a powerhouse with the stock taking off into the stratosphere based on the surprising strength of a drug called aylea it's a blockbuster drug for macular degeneration fast forward ten years and rejenner ron stock traded all the way up to $592 before getting slammed by a market wide selloff. for the sake of using round numbers, let's just call it 500 bucks ten years ago. you could have bought regeneron speculation 5 bucks. what would have happened with that five bucks? how about a gain of roughly 9,900% not a double, not a triple, not a quadruple.

no, regeneron is a ten bagger but you never could have gotten in on that guy dan particular gain if you hadn't taken a little risk in 2005 and bought a company with no profits, no products on the market and only the promises of a ceo that would work out many similar small cap biotechs have done nothing or lost you enormous sums over a short period of time or larger some have been kicking around. you won't always be able to identify who's the winners in this kind of space but that's okay as long as you cast a wide net, speculate using basket. if you take small positions in ten speculative biotechs, nine of them go to zero, as long as the tenth one was regeneron, would you still make a lot of money. it absolutely belongs there because the risk/reward absolutely makes sense when you're young for older investors though speculation is much more risky game and i only recommend playing it with excess cash that you absolutely can afford to

lose here's the bottom line remember to speculate while you're still young enough to be able to take the hit if something goes wrong as long as you're disciplined and only makes a small part of your discretionary portfolio. then it's absolutely worth hunting for the next regeneron without hesitation much more "mad" ahead. stocks or bonds? the age-old wisdom you've heard is wrong and i'm about to rewrite the script plus the game plan you need to follow when the bear market strikes and it's the most important piece of advice about financial health i could ever give you many of you will have to take action tomorrow. don't miss this. stick with cramer. what's better than "mad money" how about more "mad money. follow "mad money" on facebook, twitter and instagram to go one on one with cramer >> what other questions do we have

ah i always tell people you've got to start with an index fund because i need you to be diversified. >> get more with guests. >> how do you stay strong? >> and go behind the scenes with the most interactive show on television >> if you can't explain in three bullets why you're buying a certain stock, don't buy it. >> follow "mad money" today. at carvana, no matter what car you buy from us, you get the freedom of a 7-day return policy. this isn't some dealership test drive around the block. it's better.

this is seven days to put your carvana car to the test and see if it fits your life. load it up with a week's worth of groceries. take the kiddos out for ice cream. check that it has enough wiggle room in your garage. you get the time to make sure you love it. and on the 6th day, we'll reach out and make sure everything's amazing. if so... excellent. if not, swap it out for another or return it for a refund. it's that simple. because at carvana, your car happiness is what makes us happy.

it's time to address a major issue that i have to admit i don't spend enough time discussing here on "mad money. i'm talking about the question of stocks versus bonds now there's a good reason why you don't hear me recommending that you invest in bonds very often. it's not just because the show is about stocks. the fact is ever since the great recession interest rates have been held down to incredibly low levels therefore, bond yields like the return you get from owning, say, u.s. treasuries have been

absolutely paul try, both by historical standards and versus what you can get from safe dividend paying stocks in general, for the last few years even when the stock market has been getting absolutely pounded, bonds simply haven't represented very good values versus equities. that's why i've so often castigated you about the idea that excessive prue dents can be the most reckless strategy of all. if you invest too much in safe versus risk treasury bonds, you've been ensuring that you'll get a very low return on your investment for many years to come all in all, if you want to grow your capital, after all, that's what investing is supposed to be about, then like i've said before, stocks are still really the only game in town, even after, what can i say, so many years. however, i don't want to make it sound like i'm poo-pooing bonds altogether there's absolutely a place for bonds in your portfolio.

an essential place, especially as you get older here's the cruxof the issue though even though i believe stocks are the best way for you to grow your capital over the long term, even in moments when stocks are at historically low levels stocks and bonds are about two entirely different things. stocks are the tool you use for capital appreciation meaning turn your money into more money bonds are all about capital preservation, they protect your money and give you a nice and steady, albeit small return that's still big enough to offset the inflation for the most part. you invest in stocks so that you can risk your wealth you have to generate even greater wealth, okay that's what it is. you invest in bonds to protect whatever part of your wealth you simply can't afford to lose. there it is. which brings me to the generational investing aspect of this question. depending how old you are, there's a huge difference in how you should approach the very idea of putting money into bonds. when you're young, investing is all about taking risks so you can get better returns

i've already explained how people in their 20s and 30s can get away with that attitude. you have the rest of your life to make back any losses. as you get older, you have more and more wealth that you simply can't afford to loss it, especially in your retirement accounts bonds are a staple of saving because u.s. treasuries are risk free they will tell you you need to own more bonds than i think is necessar necessary. our government's longest dated bonds with the highest yields, their lower terms don't produce much in the way of capital appreciation let's say simply for the sake of this example that 30 year treasury bonds, let's say they're yielding 3 point be point 5% relatively lower level that is much higher than the 2.5 to 3.25 range we saw in the first few months of 2015 with the 3.5% yield as long as you reinvest your coupons, you

might double the benchmark for u.s. stocks is 10% annually which will let you double your money in a little more than 7 years. if you're under the age of 35 and you own a bunch of bonds with the idea that they'll slowly but steadily make you money, i think you're being way too cautious i know it puts me out there, but you know what, i've been around. that's how i feel. even in your 401k and ira, you want to be very heavily weighted in stocks particularly because the tax advantage vehicles allow you to have your gains compound tax free year after year after year as you get older, owning treasuries, especially in your retirement fund, becomes absolutely essential unlike the stock market where you can lose money, bonds really are safe once you've used the stock market, you do want to funnel more of your money into u.s. treasuries where you know it won't vanish overnight ideally you do that by putting

your cash in a cheap bond fund it mirrors the yield you get from long term treasuries. let's get down to brass takes. how much should you keep in bonds versus stocks? that depends how old you are i'm going to give you my rule of thumb. i don't think you should have any bond exposure whatsoever until you turn 30. if you own bonds at the age of 25, you're wasting your youth. it's better to put your capital to work in the stock market where it can actually grow in your 30s i'm going to let you keep 10% of your retirement fund in bonds or 20% if you're on the conservative side. once you're in your 40s i think you can go up to 20 to 30% bonds. in your 50s i say 30 to 40% and in your 60s as you approach retirement age, all right, take it up to 40 to 50% that's right, 40 to 50% bonds. now even if you retire though, you know what, i think you should keep a substantial chunk of your portfolio in the stock market post retirement recommendation is that you increase your bond

exposure to 60 to 70% because once you stop working, you really can't afford to take too many losses with your investments. especially since you're going to need to start spending the money in your retirement accounts. excuse me. but that said, i still think keeping roughly 1/3 of your money in stocks makes sense even for a retiree. that's because you're going to be living off your investments for the rest of your life. some part should always be trying to create more wealth in case you live longer than you expect and need more money to support yourself in other words, going all in on bonds once you've retired is a bet against your own longevity who the heck wants to take that kind of bet? here's the bottom line for younger investors putting your money in bonds is a fool's game, but as you get older you should gradually increase your retirement bonds exposure to the point where 40 to 50% is in u.s. treasuries by the time you're in your 60s because that will be protected against the volatility of the stock market.

even if you retire, you should keep owning some stocks so that some piece of your capital can continue to appreciate over the long term. best case, you live a very long time and that extra money, it comes in handy let's take some questions. how about nasir in pennsylvania. nasir. >> caller: boo-yah, jim. >> how are you >> caller: i'm good. i'm a big fan of the show. >> thank you >> caller: thank you for taking my call. >> thank you. >> caller: i love your book. i'm looking for advice on how to determine an entry price for a stock especially if i'm looking to start a core position >> i think this is a great question and the reason why it's a great question is a lot of people feel like they want to draw a line in the sand. they want to make what i call a statement buy or they want to be in a position where they kind of got rid of it. they bought it and they put it away that's why i say take into account human frailty. the most i ever like to buy at one point is half of my position i prefer to buy 1/4.

if the stock goes higher, well, what a terrible high quality problem. if it goes lower, you've got room to buy. i like to buy in stages. i want to stage buy. don't you be over confident. do it in stages. brian in new york. brian. >> caller: hey, jim. how are you? >> i'm fine, how are you doing >> caller: i have a 401k plan from a previous employer and i'm trying to decide whether to put it in an annuity managed by an insurance company or if i should just put it in a traditional ira. >> i want you to run it yourself you watch the show i think you can do it yourself the annuities have fees. look, i'm not against anything that makes -- so that other people can build wealth, but my experience has been that a lot of annuities have fees that eat things up. maybe there's some that don't, but i believe in self-directed investing when it comes to that and if you have to, you can put it in an index fund if you don't have time, but i do like to take control of my investments. and an ira lets you do that.

listen, investing in stocks and investing in bonds are two very different things as you get older, you can gradually add exposure to bonds but young investors don't belong in bonds much more "mad money" ahead including the playbook for when a bear takes a bite of your money. if you want to ensure a strong retirement, you're going to want to listen to my advice and take action tomorrow morning. don't miss it. i'm answering the questions you've been sending me on twitter. so why don't you stay with cramer

one-millionth order. millionth order. ♪ there goes our first big order. ♪ 44, 45, 46... how many of these did they order? ooh, that's hot. ♪ you know, we could sell these. nah. ♪ we don't bake. ♪ opportunity. what we deliver by delivering.

tonight rather than focusing on the day-to-day have i sis si tuds of the stock market, i want

to help you take a much longer time horizon than we normally discuss. when i say longer i'm talking taking a 20, 30, 40, 50 year field. there's no such thing as a stock you can buy and hold for the next decade or two i wish it were that easy it's not my mantra is buy and homework, not buy and hold it means no matter how confident you are, keep checking up on it. make sure nothing is going wrong with the story just because you can't pick a few stocks and ignore them for the next couple of decades, that doesn't mean it's impossible to take a long term view. you need to zoom out a bit when you start examining stocks over a multi-decade time horizon, one thing becomes readily apparent if you know what you're doing, a bear market can simply be a different kind of opportunity. that's right when stocks are getting slammed, when they're getting hit everywhere you look, when it seems like the losses will be endless, when the shares of

individual companies can't mount positive news, you have to recognize that you could be getting a terrific opportunity to pick up some high quality stocks for the long run into the weeds. now i'm not giving you a license to buy stocks indiscriminately, but what i am saying is when you are faced with the bear market, when the average is down 10% from their highs and they seem like they could go even lower, it probably makes more sense to start buying those stocks rather than selling them as long as you're willing to take some short-term pain for long-term gain whatever you buy during the bear market, that means you have to be careful never buy a position all at once that's pure arrogance. you're asking yourself to look like a moron instead, gradually lag into your favorite stocks buying small positions incrementally. humility please. in a bear market you want to use wider scales, meaning after you make a purchase you have to wait for that stock to go down pretty

meaningfully and substantially before you buy more. over the very long term you'll probably find that you've take general advantage of a terrific opportunity that most people were too afraid to pounce on think longer term. something we didn't do at the beginning of the show but we're way past that now, aren't we you don't believe me just look at this chart of the s&p 500 over ten years starting in the fall of 2005. look at the hideous declines in the financial decline in 2008, 2009 if you used that weakness to very gradually build in a cheap s&p 500 on the way down, within a couple of years you made a killing. how about that nasty bear of 2011 we snapped back from those losses even more rapidly by the way, this is why warren buffet seems so sanguine when the market crushes he can take any level of short-term pain in order to get his hands on long-term gains if you have a shorter time horizon, for example, if you're a hedge fund manager who needs

to be up for the year, day for. >> maria: ter, then you cannot afford to approach it that way if they buy gradually into weakness and difficult environment, you'll lose enough money in a short enough period of time that the fund will likely go under. go read "confessions of a street act" although we were able to pull out of a tail spin. the vast majority are not running hedge funds. you don't need to make money every day or every month or year what you need is a long-term strategy that lets you rake in massive multi-year gains over the rest of your lifetime so that you have enough money to retire comfortably, send your kids to college. that means you don't need to be so concerned with short-term performance. this is not an excuse to hang on to loser stocks of loser companies simply because you hope it will turn around my point is that the ugliest, most vicious markets that send everything around, they always create opportunities for smart investors as long as you're patient enough to take advantage of them slowly because if you pounce too quickly, you'll end up buying way too close to the

top. the other caveat, if you're not simply playing with an s&p 500 index fund, then you have to be careful what stocks you pick during a bear market do the homework. make sure you own the stocks of companies that do well or balance sheets or companies that are doing okay during a bear market you must absolutely not buy the stocks that are right in the blast radius of whatever is causing the decline. think the banks in 2008, 2009. oil and natural gas resource plays that started going down literally in the fall of 2014. you don't want to own the companies that are causing the weakness instead you should search for collateral damage stocks that are going down simply because everything is being taken lower by the s&p 500 futures and the etfs that crush entire sectors if you own anything in the blast zone, please don't hesitate to -- sell, sell, sell. >> and swap into something safer. if you want to take advantage of a monster decline to do buying, you absolutely need to have some carbon the sidelines in order to make your move

otherwise, you'll just be shuffling money between different stocks all of which are going lower. that's why i'm so adamant that you always have some cash in your portfolio and the better the market's doing, the bigger your cash position should be that's right, the better, the bigger that way when things go wrong you'll be able to buy the weakness of the stocks at bargain basement prices. when you approach the stock market with a long term time horizon, you have to remember big bear market declines can actually turn out to be excellent buying opportunities as we've seen since we started the show, as long as you only purchase high quality merchandise in small increments on the way down. stick with cramer. i'm working to keep the fire going

for another 150 years. ♪ to inspire confidence through style. ♪ i'm working to make connections of a different kind. ♪ i'm working for beauty that begins with nature. ♪ to treat every car like i treat mine. ♪ at adp we're designing a better way to work, so you can achieve what you're working for. ♪

purchase high quality

- i love my grandma. - anncr: as you grow older, your brain naturally begins to change which may cause trouble with recall. - learning from him is great... when i can keep up! - anncr: thankfully, prevagen helps your brain and improves memory. - dad's got all the answers. - anncr: prevagen is now the number-one-selling brain health supplement in drug stores nationwide. - she outsmarts me every single time. - checkmate! you wanna play again? - anncr: prevagen. healthier brain. better life.

all night i've been telling you about the best way to approach investing from a long life, long generational perspective. how to manage your money when you're young, when you're middle aged, hey, when haven't you heard 60 is the new 50 and even once you retire but there's another aspect of generational investing that i have to stress here and that's a need to get your kids interested in managing their own money. while i love the public school system, you simply cannot rely on the public schools or even ritzy private schools for that matter to teach your kids about money. they can do a bang up job with english, history, physics. you want your kids fluent in a foreign language, great. however, if you want your kids to be fluent in the language of finance, you're going to have to do it yourself

i get the sense that personal finance is too simple for most educators to bother with it's like beneath them your typical high school health class will help kids put a condom on a banana but nobody's going to explain why it's dangerous to maintain an outstanding balance on their future credit card bills believe me, you can't wait until after your kids go to college to teach them this stuff. at most institutions of higher education, students get bombarded with credit card offers that can seem irresistible i took down five of them throw in thousands of dollars on top of student loans and they could be in the hole for decades which means you, the parents, will need to bail them out we don't want that raising financially responsible children isn't about being a good parent, its about not getting hit up for cash when your children are into their 30s. what parents don't want financially responsible children at this point you need to do it

yourself that means you need to have some long, boring conversations about the dangers of high interest debt, like the kind anyone can rack up on a credit card and the need to save money with the power of compounding interest. but in my view, the best way to make all of this dull personal finance medicine go down is with a spoon full of stock picking sugar. in other words, starting at a fairly early age, i recommend giving your children gifts of stock in high quality companies that resonate with young people. my classic example here, i've been using it since the show started, is disney give them a couple of shares a year for the holidays starting when they're old enough to appreciate the big movie franchises because disney has so much going for it, so many blockbuster films planned over many, many years in the future, not to mention a terrific theme park business, by the time your kids are teenagers i think their disney holdings will show a nice gain there is no better way to demonstrate the power of saving

money and investing in stocks than having your children actually make money in the stock market themselves and follow it along. look, as much as i like disney, you don't have to go with mickey mouse. it could be any high quality company that will resonate with somebody still in elementary school here's the bottom line the point of getting your kids interested in stocks early is you need to teach them a different way of thinking about money early rather than cash is something to be spent. you want your children to learn that money is something that can be saved and invested which creates more money at the earliest possible age. look, if you don't want to do this for your children, do it for yourself because kids who can manage their own finances are kids who won't be begging you for moolah even after you've gone into retirement stick with cramer. i don't know what's going on.

i've done all sorts of research, read earnings reports, looked at chart patterns. i've even built my own historic trading model. and you're still not sure if you want to make the trade? exactly. sounds like a case of analysis paralysis. is there a cure? td ameritrade's trade desk. they can help gut check your strategies and answer all your toughest questions. sounds perfect. see, your stress level was here and i got you down to here, i've done my job. call for a strategy gut check with td ameritrade. ♪

okay, cramerica, it's time for me to check out the twit terse fe twitter sphere first up, we have @fridge93 who says you talk in your book about

research what are a few bits of information we should look for when stock picking the first thing is i want you to know the product i want you to know what it is and i want you to like it. the reason is a lot of times stocks go down after you buy them if you like the product, you'll be more inclined not to panic and get out. after that you can read in "get rich carefully" i'll tell you how to rate a stock. you can do it on a number basis and figure out where it should stand versus others but you've got to like the company first or i promise you, in the first big selloff you'll become a seller not a buyer. i don't want that. okay the next question is from patrick. it's sutera @patsutera jim, for retirement is it best to dollar cost average index funds or wait and buy on market downturn/mad tweets? this is really important here's the way i do it i try to do it 1/12 a month if i

can. but if there's a big break in the stock market i accelerate some that i would do later in the year and put them to work in that break, even up to 1/3 of it in other words, i like to take advantage of the declines and accelerate what i put in, and i've done that for years and years and it's really worked for me otherwise, divide by 1/12. larry blumen this morning my wife said what would they do without cramer my wife said the same thing all right. now, look, you know, i'm a teacher. i got some books i try to come out here every night, but it's really important for people to know, what would you do without yourself? see, this is about empowering you. it's not about giving you ideas. it's about how to look at them a lot of people look at the show who haven't watched it over the evolution and say, oh, all he does, he tells you to trade in and out of this or that. i hope that you know that it's the opposite

longer term investing is the way to make money. index funds and then mad money and doing homework and trying to figure out how to do it yourself last is jeffrey hope jim, would you mind sharing your sunday stock routine please? >> all right i have -- i get this thing from the -- from standard & poor's. it's pushed to me via email. it's hundreds and hundreds of charts i go over each one i have a file that says, good, bad, question mark, try to figure out why that went up and then story idea for show and i write down each one and where they are and where they fit and then when i'm done i tend to do a piece for real money, a long piece. that's the paid side of the street where i look at what trends i see and then for the rest of the week i send my staff which stocks i don't understand and why and some theories about why we should be doing certain pieces, and it takes up almost all sunday except for when the

eagles are playing stick with cramer.

you should be mad at airports. excuse me, where is gate 87? you should be mad at non-seasoned travelers. and they took my toothpaste away. and you should be mad at people who take unnecessary risks. how dare you, he's my emotional support snake. but you're not mad, because you have e*trade,

whose tech helps you understand the risk and reward potential on an options trade it's a paste. it's not liquid or a gel. and even explore what-if scenarios. where's gate 87? don't get mad. get e*trade and start trading today. i like to say there's always a bull market somewhere and i promise to find it just for you right here on "mad money." i'm jim cramer and i'll see you next time!

narrator: in this episode of "american greed"... y'all feeling good? ...meet professional saxophonist donald "ski" johnson. he's a recording artist and red-carpet fixture... y'all looking better than me, man. ...who runs the jazz for life foundation. but the feds say johnson's charity helps no one but himself. it shocks the conscience. money was being taken from these charities, and it was going to line his own pocket. narrator: in an exclusive interview, johnson insists he's no scammer, and he's tired of investigators calling him a con man. they don't respect me as an artist. they think anything i do should be free. and the minute i ask for a dollar, it's a scam.