23rd no show tomorrow amazing! numont is higher, look at gold >> that does it for us "mad money" with our friend jim cramer starts right now. with our friend 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 cray mer ka other people want to make friends, i'm trying to make you some fun my job is to educate and teach you, so call me at 1-800-743-cnbc or tweet me at jimcramer. there's a gaping hole in the american education system. although even calling it a system seems overly generous when you go to high school they teach you chemistry, they teach you geometry, physics, english

classes, history classes, foreign language classes you can graduate with a deep understanding of quantum phys s physics. you can get a ph.d. in modern literature they teach that in school if you get enough education but you know the one thing they almost never teach in middle school or high school, to say nothing of college, financial literacy and i'm not talking about economics here you could be an econ major and still learn nothing about personal financial planning, retirement readiness, let alone how to invest your money wisely. money is just not talked about it's almost like a third rail of american education you're a thousand times more likely to read doss capital. marx is actually a pretty good economist, he's not going to show you how to balance a checkbook, let alone manage a portfolio of stocks. financial literacy, the third rail that's why aisi'm on a constant

mission to teach you how to manage your money so you can be a better investor. think of this show as a continuing education for all things financial nothing is more important than retirement sooner or later you're going to stop working, hopefully sooner rather than later, unless you really love your job i'm betting most of you still have some money in a 401(k) plan now the 401(k) is the main parkway that americans save for retirement they're offered by your employer, and they're among the greatest tax deferred investment vehicles out there along with the ira. i mean the individual retirement account. for those of you who are about to pass out or change the channel because the whole idea of saving for retirement puts you to sleep, hear me out for a minute you need to know this stuff. believe me, your future self will thank you for getting your retirement funds in order. while you may think you know everything you need about these tax favored accounts, you think

you know it all? the truth is there's a lot that the so-called experts don't tell you. for example, the conventional wisdom says you must invest in your 401(k), many experts will advise you to max out your 401(k) contributions every year if you can afford to right now a maximum contribution is 19,000 or 21,000 if you're over 50. it tends to rise gradually over time either way, that's a serious chunk of change. even these contributions coming from your pretax income. however, i think that's the wrong approach i'm not going to sing the praises of the noble 401(k) plan right now or tell you it's the key to your financial salvation. the truth is that 401(k) plans they can be a real mixed bag sure they have a couple of great features, but they also have a lot of bad ones. and those problematic features will eat away at your returns year after year, sometimes through fees that are almost totally hidden from you. the ones i've been involved in,

i've got to admit, hidden, hidden let me lay out the good, the bad, and the ugly of 401(k) plans. then i'll tell you whether it makes sense to contribute more money to your 401(k) or a better way to put that cash to work the best thing is it's a tax deferred vehicle you pay no taxes on what you put in and never pay a penny of capital gains taxes, which allows your gains to compound year after year totally tax free until you decide to start making withdrawals. your viewers know i'm a huge believer in the power of compounding. let me give you an example suppose you're 30 years old and start investing $5,000 a year in your 401 k, if you choose wisely, you should be able to generate on average a return of 7% per year. at that pace over the course of the next 30 years, you'll be contributing $150,000 tax free to your 401(k) because that money is able to compound year after year without any capital gains taxes. by the time you're 60 that

$5,000 per year pretax income will be worth over $511,000. you have if you had to pay taxes, that money would be a lot lower you only ever pay taxes on your 401(k) money when you decide to withdraw it. at that point your withdrawals are taxed as ordinary income since you'll likely be retired, most of you will end up paying a lower rate that's one major reason to like 401(k) plans the other, many but not all employers will match or parti partially match your 401(k). your employer might throw in $0.50 up to a certain point. that's free money, people. it's also untax md if your employer even partially matches your contributions, you should take advantage of putting money in your 401(k) there's no question. if your 401(k) doesn't have a match, i think so it's a much less compelling option 401(k) plans can have a lot of

problems without the match you're much better off saving for retirement via an ira, which has the same exact tax favored status as a 401(k) you can only contribute $6,000 a year towards your ira or $7,000 if you're over 50. if you change jobs you can roll over the money from a 401(k) to an ira what makes an ira the better option first there are the fees when you invest in a mutual fund within a 401(k), you have to pay the mutual fund fees but the company your employer hires to run those plans will charge its own fees. on average they take more than 2% i find that extortion and plain wrong. have you ever looked at your statement and wondered why the heck your 401(k) holdings aren't increasing in value like you thought they should be, i've got it to to tell you it's the fees. here's the bottom line on

retirement investing if the company you work for offers an employee match, then you want to put money in your 401(k) until that match is maxed out. after that put any additional retirement savings in an ira if there's no employer match or there's an employer match but your 401(k) doesn't give you any options worth investing in, you would do much better to go straight to an ira and only start putting money in your 401(k) once that ira is maxed out. i'm going to go to andrew in north carolina >> caller: hey, jim, how the heck are you >> i'm doing well. >> caller: i was hoping you can help me out. i'm an early investor, just a couple of years out of college i finally not some extra money in my pocket i'd like to invest. i was wondering do you think it's more advisable to look for a stock with a good chart or one with a good dividend history that i can reinvest my earnings? >> i like to have everybody be comfortable with what they do. to me dividend reinvestment compounding is terrific. charting is a little too tech,

too let's say -- i like the technicians but it's too short-term in nature, and you've got your whole life ahead of you. lets buy some stocks with good dividend that have great growth. i think that's perfect for you how about mark in florida. mark. >> caller: booyah, jim >> yes >> caller: i've made a lot of money in the market as of late, and when the big boys say take some off the top, what do you use as a guide for that percent that you take off? >> for my travel trust, i find it's not such a bad idea up 25% to pull off a little up 50% to pull off a little, when you're up 100% you take out the house's money, you let the rest ride. it's been my rule, and it's worked for me for more than o'40 years. bobby in new york, bobby. >> caller: yes, how are you jim? >> i'm doing well, how about you? >> caller: all right, good, i'm 67 years old i have some money put aside. i'm retired. i'm collecting social security and my pension that's not that

much, but whatever little money i have i want to invest it, but i don't want to have it jeopardized. i can't afford to lose it. >> right i've got to tell you what you want to be able to do then is you want to be in stocks that have good yields i have a book called "stay mad for life" where i tell you simply how to walk through and see if the yield is safe that's what i would do the typical stocks i've recommended over the last 40 years would be something like the telephone companies but the maj major telephone companies and the utilities, the major utilities. i think those are made for your investing. when it comes to retirement, if your company matches your contributions to a 401(k) max that out if you don't get an employer match or you don't have investable options, straight to an ira, please much lower fees. you just got your diploma, now what don't miss my investing advice for college grads.

there are many roads to a healthy retirement let's chart your course. stick with cramer. >> don't miss a second of "mad money," follow @jimcramer on twitter. have a question? tweet cramer, #madtweets send jim an e-mail at madmoney@cnbc.com, or give us a call at 1-800-743-cnbc miss something head to madmoney.cnbc.co apple card. is a new kind of credit card, created by apple, so it's simple and transparent with a new level of privacy and security. it lives here and here- on your iphone, and it will save you 6% on holiday gifts at apple; like iphone,

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♪ if everyone in this country lost their minds and decided to turn america into cramerica with

me as your king, you better believe i'd make some serious changes. what would the 18th premier of jim cramer look like for those of you that didn't get that reference, i think google could be your friend this is a show about money then let's stick to the more mainstream elements of the cramer regime. for starters, it drives me nuts that we don't really teach our young people about how to handle their money. would it be so crazy if you had to take a class in personal finance before you graduate from high school? i think it should be mandatory, like those awkward health classes where they show you how to put a trojan on a banana, and that was only vaguely referenced to the ill yad sadly i am nobody's dictator, even though i was a guest judge on the apprentice i have no influence on education policy, be but i do control what i talk about on this show can i just say some words we all

believe but very rarely get to say in polite conversation money is important, it's really important, and caring about the state of your finances does not make you superficial you've just inflicted your horrible credit on your new spouse neither you nor your partner will be able to qualify for a loan to buy a car or a home or just get a darn credit card. these things matter in life. look, i know they say money can't buy happiness, but i've always found that a bit of cliche commercial wisdom to be dubious at best since being broke is a major buzz kill yeah, firsthand, i spent time six months in my 78 ford fairmont when i lived in california i sure wish i'd had an expert to guide me through this money stuff way back then, although i still put money away for retirement when i lived in my car. let me answer one of the most important questions out there. what the heck should young

people do with their money first, foremost and always, you need to invest that's the only way you're going to be able to cheat financial freedom, and by freedom, i mean living a life where you're not totally dependent on your paycheck for everything. i'm always thrilled when i see members of the younger demographic who are taking an active hand in managing their money. too many people start saving and investing too late making their lives more difficult than they need to be many young people feel like they have all the time in the world and many more start investing before their truly ready, in fact, better things for them to do with their money they think they have but they don't they need to invest. invest young invest young invest young that's why i have three lessons and a kaf yaccaveat for all thoe recently out of college. before you can start investing you need to pay off your credit card debt. it's special trespecially true e

people no matter how much money you rack up in the stock market if you're carrying a balance on your credit card it's going to eat into your long-term returns. long-term the interest of those credit cards will probably be greater than you could possibly make in the stock market, at least on a percentage basis. pay your darn credit card balance in full every month. automate it with your credit card company if you're worried about being tempted not to when i got out of law school i maxed out on half a dozen credit cards. i took a job at goldman sachs and made good money, but not enough to pay all that interest and be able to afford the biggest boom box in the world, which was my first and at that point only priority. i paid down the debt pronto and got my dream box three months later, and now you're talking. the point is credit cart debt is onerous even if you're hitting it out of the park with your paycheck they are the house, they win you lose

now, let's get to my three lessons for young investors. this advice is really for everyone out there, regardless of age or educational level but especially applies to fresh college grads. you need to save money i recognize that not everyone has an inherent predisposition to save. we can't all be natural cheapskates. adults telling you to save over and over again won't do any good the stock market is way to trick yourself into saving money you might be tempted to spend. leaving money in a cd feels joyless to most people, not to mention the returns are so small they're basically meaning hadless. this is a much more targeted piece of advice. while you're still young you can afford to take more risks than an old fogey like myself. owning more speculative single-digit stocks where the potential upside is huge but so

is the potential downside or playing with options and just generally being more aggressive with your money. why is that? it's not because young people are naturally better spectators it's simply because when you make money and make a money mistake in your 20s, that mistake, you've got your whole rest of your life to fix it. you can afford to buy more high risk stocks that end up losing you money when you're young because you have 40 odd years to earn the money back. i am jealous of you. older investors caution, you knead to need to be more cautious more bonds, more high yielding stocks, fewer speculative stocks, if you're in your 20s you should invest like a young person, not an old person. forget about bonds, please i'm begging you. there's no reason for someone in their 20s to have bond exposure when that money could be invested in stocks where it will most likely end up consistently making you a higher return year after year after year.

stoc does he like index funds, yes. young people, i want you to take this advice to heart college grads are also the ones who are most prudent about their money. prudence is great when you're putting together a budget to live within your means or deciding how much of your paycheck to save every month for young investors being too prudent is reckless. live a little, at least in your stock portfolios forget about bonds, and for the next decade play around with some more speculative names, maybe some tiny bio tech companies with a lot of potential. either they blow up with you and go all the way to zero, you do have the rest of your life to earn that back have you looked at how low those interest rates are on those student loans versus credit card debt i chose to invest my money after i got out of law school. after paying my credit card i still invested knowing i could beat that student loan i'd rather have you invest now

and pay later. it's never too early to start investing for retirement use your 401(k) if your employer will match and put money into a roth ira for young people just out of college, investing is a great way to trick yourself into saving money you might otherwise spend. beyond that, remember, when you're young, you can afford to make a lot of mistakes and take a lot more risk. and it's never too soon to start contributing to your 401(k) or ira especially if that ira is a roth stick with cramer. ♪

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we live in a world where you have more choices about where to invest your money than ever before it's pretty confusing out there. there's a virtual infinity of etfs, mutual funds, you name it. more choice isn't always better. sometimes having more options makes it impossible to decide which ones are right and which ones are dead wrong, 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 they can make your head spin. by the way, i hate the way many of the spector based etfs, the

ones that let you buy or sell an entire group have been warping the way the stock market trades itself that's something you can -- if you don't understand you can read about in get rich carefully. many are flavor of the month designed to cash in on something that's in the headlines, fool you frankly, all those silly faangs, the cannabis, the get rich quick as far as i'm concerned but only for the people who created it, not for you. but the important thing is this. you have all sorts of etfs and much mutual funds out there, and they can all advertise. they're great at that. the companies that want therun these funds want your money. unfortunately and this is also one of the most common money mistakes out there, in fact, most people in this country equate investing with putting their money in mutual funds. some 80 million people or basically half the households in america have exposure to mutual funds. many of you don't a choice

a lot of 401(k) plans don't let you pick individual stocks the 401(k) plan i was involved in wouldn't let you. they give you a menu of mutual funds to choose from an individual retirement or an ira is the better way to invest for you. "mad money" is predicated on my experience and what i've seen all my investing life. if you have the time and the inclinati inclination, both are important, i believe you can beat the s&p 500. i know because i've seen it done so many times in the past four decades by so many people. people i know. what is so bad about mutual funds? if you're investing in mutual funds you're most likely to put it delicately, you're getting hosed. why? mutual funds where there are people deciding what securities to buy or sell unlike hedge funds, mutual fund managers don't get paid for delivering performance, they collect fees from their investors, and the amount of

money they make depends entirely on the size of their assets under management, which means the biggest incentive is not necessarily to do well, something a good performance can help with. no what they're really being paid to do is fund-raise, and that's part of the reason why in study after study year after year it's been shown that the vast majority of actively managed mutual funds under perform their benchmarks in other words, if you invest in an actively managed fund for large cap u.s. stocks its performance will most likely fall short of the s&p 500. to make matters worse, despite consistently under performing in the market, actively managed mutual funds have some of the highest fees in the business it's counterintuitive. that's some industry that's when businesses sink or swim at my found we compounded 24% annually after all fees versus 8% over the s&p 500. even chose not to take them when i was up only a couple of

percent. i was embarrassed. did a mutual fund manager ever do that for you? now here's the part where i say not all actively mutual funds actively managed mutual funds are bad. some of them have fabulous records. some have fabulous managers who consistently deliver terrific results. when a mutual fund delivers amazing results for a longer period of time, if the manager's a decent person, they'll stop accepting new investments. a lot of these high quality funds are out there but they don't take new money when your fund gets too big, it becomes incredibly difficult to beat the market. if the manager's a not so great person, they'll take in more and more money until the performance status starts to suffer. when the late great john vogel, the father of the index fund asked me how i could beat the averages so consistently when i was at my hedge fund, i said that i limited my investors and made it like a club where you had to be nominated to get in. that meant i was never

overwhelmed with new money, something that also leads to bad investment decisions he said if everyone did that they could have much better records too. maybe that was the real secret sauce of my hedge funds. if you're going to invest in mutual funds you don't want to be in an actively managed one, the fees are too high and the evidence that the bulk of them under perform is too staggering. if you're investing in a norm count they'll inflict capital gains taxes on you where you control when to pay, at least for the taxes if you own your own stocks in visual stocks you don't have to sell them, you don't have to pay. if you don't have time to run your portfolio, i really want you to own a cheap low coast index fund that mirrors the s&p 500. this may sound like a simple solution but don't over think it. the whole point is to save you the time and effort required to manage your own portfolio of stocks that's why i think it's insane when people start owning multiple mutual funds. funds should be diversified.

i know there are a lot of sector based mutual funds but there's no reasons for you to have any exposure to those. nobody says this, i'm saying it. if you're going to take the time to play individual sectors that time should be better spent picking individual stocks. as for etfs these vehicles are for trading not investing. many balance every day, and that can take a toll on long-term performance. there are exceptions like the gld, the etf i like, and i like the etfs that mimic the s&p 500, but in general, if you're not a pro and you're not managing a portfolio and individual stocks you should be very careful about fooling around with most of this stuff, especially those double and triple leverage ones those are a nightmare. don't do them. at the end of the day i think a cheap s&p 500 index fund is the least bad way to passively manage your money. an index fund owns everything, the goord, bad, and the ugly if you have the time to do your

own home work i believe you can beat the performance of an index by picking stocks yourself if you don't have the time, though, don't over think it. just one cheap s&p 500 index fund is the best way to go let's gro o to chris in florida. >> caller: quick question, i'm 35 and i have my 401(k) diversified across stocks. what suggestion do you have to help better grow my retirement >> keep things simple. don't have a lot of funds. make sure that you have the right amount of cash, and make sure you're getting a lot of income because you're going to need that because it's going to compound over time remember, you're diversified if you own a diversified fund don't feel like you need to be diversified by owning three diversified funds or five diversified funds. i've seen that far too ften. not so mutual love here for mutual funds picking stocks is still the best

way to manage your money, but if you don't have time or inclination, go with the -- over most actively managed funds. i did not dismutual funds if they have low fees much more "mad money" ahead, including how to find the best path towards healthy retirement depending on your income don't forget the kids, protecting your kids are from student loan debt will put them in a better position to build a better future. plus, i'm responding to your tweets without the 140 character restriction, so stick with cramer ♪ ♪

♪ everything your trip needs for everyone you love. expedia. and i approve this message. climate is the number one priority. i would declare a state of emergency on day one. congress has never passed an important climate bill, ever.

this is a problem which continues to get worse. i've spent a decade fighting and beating oil companies, stopping pipelines, stopping fossil fuel plants, ensuring clean energy across the country. how are we going to pull this country together? we take on the biggest challenge in history, we save the world and we do it together.

itreat them all as if, they are hot and energized. stay away from any downed wire, call 911 and call pg&e right after so we can both respond out and keep the public safe. ♪ no matter how good you are at stock picking, if you don't know all the rules about what kinds of accounts to keep your money in or how to manage your personal finances or how to get the most bang for your buck when it comes to major lifetime expenses you could be missing out on terrific gains or maybe losing a fortune to hidden fees. >> boo. >> i admit this kind of stuff isn't as fun as picking stocks over the course of your lifetime it really could help you build

up more wealth than a couple of great stock picks. the simple truth is i don't want you leaving that money on the table just because nobody could be bothered to explain the finer points of retirement investing so with that in mind, let me explain whether it makes sense for you to use a regular 401(k) or ira or for you to go with a roth which is a term i'm sure you've heard countless times i know i've talked endlessly about the benefits of using an individual retirement account and a 401(k) plan to invest for retirement i don't want to beat a dead horse, but this is a subject i get a ton of questions about shoultd i put my money in a roth account or regular one let's start with the roth ira which anyone can contribute to as long as they make less than $137,000 a year. i think aside from the earned income tax credit, the roth ira may be the single greatest thing our government has done for lower income families since the end of war on poverty. if i were king of the forest, i'd make the limits for the ira investing the same as the ones

for the 401(k) it's ridiculous that they aren't, but the industry doesn't seem to care paubecause they ma lot more money off 401(k) plans. there's no other reason i could find for why you can contribute roughly three times as much money to a 401(k) as an ira. it doesn't make sense. it's got to be the industry. no one talks about it. i told you all about how a regular ie roadway lets you take pretax income, invest it and your gains can compound year after year totally tax free until you decide to start withdrawing money once you've retired. a roth ira works differently with a roth you make contributions using after tax income putting it into a roth won't decrease your tax bill, at least not up front on the other hand, once your money's in a roth ira you'll never pay taxes on it again. as long as your tax remains, you don't pay capital gains, you don't pay dividends tax, and when you withdraw it when you

can do after the age of 59, you don't play any income tax on your withdrawals with a roth you pay taxes now so that you don't have to pay any income taxes 30 or 40 years from now when you retire. there's one more positive point about a roth after five years you can withdraw the money you've invested, not your gains, and you went get hit with a 10% penalty, which is what happens when you try to withdraw money from a regular ira that's very different from a regular ira where you don't pay any taxes on your contributions now and krr gains don't get taxed within the account, but once you withdraw money everything you take out is taxed as ordinary income when you're trying to decide a roth ira you need to determine whether it makes more sense to pay income tax now with a roth or wait and pay income tax once you're retired you're trying to figure out whether you'll be in a higher tax bracket after you retire or a lower one. that's a complicated question.

it has a lot of specifics with your situation i always tell people look on these questions, i think you've got to speak to advisers you've got to know yourself, okay it's really important. it's more than just simply how old you are. my quick rule of thumb, for anyone whose marginal tax rate which is 25% or less which is most of america, take the roth better to take the hit up front. remember, for those of you who don't have the time to pick your own diversified portfolio, say at five to ten stocks, of course beyond the index fund, the smartest thing to do is park your retirement money in a low cost index fund that mirrors the s&p 500. as you get older, you can add some bonds, but really until you actually retire, i still think stocks should make up majority of your retirement investments don't forget, people live longer i know i've said this before, but i'll keep repeating it until they take me off the air because it's so necessary. i want you in stocks longer and longer

how about this roth 401(k) this works just like a roth ira meaning you make contributions with the after tax income and never pay taxes on that money again, except because it's a 401(k) plan it's a much higher contribution than an ira you could put $19,000 into a 401(k) that's just as true for a ro 401(k) unlike a roth ira, a roth 401(k) doesn't have any kinds of means testing. no matter how much money you earn, you can take advantage of a roth 401(k) as long as your employer decides to give you the option all these decisions depend on what you think the future will look like. if you believe that taxes are ultimately headed much higher over the course of your lifetime, then a roth 401(k) where you pay your taxes now and pay nothing in the future is the way to go even if you're making a lot of money in the present at the end of the day, this is both beyond our control and beyond our ability to predic professionals.

the lower your present income, then the lower your tax rate a roth 401(k) or roth ira lets you pay those low rates now and never worry about taxes again for your retirement money. the less money you make, the more likely that the a roth is for you. yes, it's that simple. and when you're 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 for yourself right now stick with cramer. most people think of verizon as a reliable phone company. but to businesses, we're a reliable partner. we keep companies ready for what's next. (man) we weave security into their business. (second man) virtualize their operations. (woman) and build ai customer experiences. (second woman) we also keep them ready for the next big opportunity. like 5g. almost all of the fortune 500 partner with us.

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♪ lately we've heard a lot about the crushing burden of student loans. tens of millions of americans owe $1.5 trillion in student debt, an incredibly high figure up 50% from just a few years ago. i don't know if it's a good idea for the government to just cancel all that debt, like some democrats have proposed. but i get where they're coming from it's not just it really stinks to graduate from college and grad school and realize it might take decades to pay back these loans. in study after study, kids that graduated with no debt end up being worth a lot more than

their classes who have outstanding student loan balances student debt is a heck of a lot cheaper than credit card debt, so don't sweat the program too much the problem here is simply that there's so darn much of it, and you can't get rid of it, even bankruptcy now i'm a big believer in mobility, which is why i'm coming out here and teaching you how to use the stock market, the greatest engine of wealth ever created to help you make some serious money. for any of you who are parents or thinking of becoming parents, let me tell you right now that there are very few things you can do for your kids future that are better than paying for as much as their college education as you can afford. we know that college graduates have a much easier time getting good jobs. we also know they ultimately make more money than non-graduates. it's just a fact of life of course if i were making a kind of abe maslow style hierarchy of financial needs, and that's m-a-s-l-o-w, i'd tell

you it's more important for you to save and invest for retirement for those of you who are parents, maybe you're wondering how you could possibly prioritize your own retirement over making sure your kids have the best possible future simple because believe me, if you reach retirement age and don't have enough money to pay for your needs, who do you think is going to support you? your kids, you don't want to be a burden on them, so take care of yourselves first. all the books say it i've studied it. i thought about it, i agree. however, after you've saved enough for retirement, then it's time to start thinking of saving for college. the best way to save for college is through what's known as a 529 plan these plans vary by state. the general rules apply across the country. there are two kinds of 529 plans. some states let you use a 529 as a way to hedge against tuition inflation. you can buy college tuition credits at today's prices and use them in the future that's not what i'm talking

about, especially not in a world where politicians are talking about making tuition free at public universities. i want you to use a 529 safgs plan these are run by the state generally speaking a 529 doesn't let you manage your own portfolio. you have to pick between a mix of different muchldtual funds i prefer you to have control over your assets but 529s have so much going for them, i'm willing to swallow this. go for a low cost fund that mirrors the market like an s&p 500 index fund what are the rules for a 529 plan let's say you had your first child, congratulations if you can afford it, you should start a 529 with your kid as the beneficiary right then and there. maybe wait a couple of days. as anyone who's read confession of a street addict knows, i've traded big boxes of -- the trades only worked out

financially if -- here's how a 529 works. the contributions are not tax deductible, so you're paying for this with after tax income here's the good part, once your money is in the 529 plan, you don't pay any taxes on your gains so they can compound tax flee year after year it's a lot like a roth ira because of federal gift tax laws you can contribute $15,000 a year if you're single, $30,000 a year if you're married, if you file taxes jointly your children's grandparents can contribute to the same 5 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 is that you can front load five years worth of contributions without incuring the federal gift tax in other words, a single parent or grandparent could potentially invest 75,000 into a 529 right

from the start or if you're married and filing jointly you can contribute $150,000. for the next five years after that, you won't be able to contribute anything without being hit by that gift tax, which is something you don't want honestly, once you've dropped that kind of money into a 529, you won't need to do any more contributions. the key here is that you want to get that money into your kids' 529 as early as possible that's because the greatest of these plans is all about the power of compounding given that you don't pay taxes in the 529, if you can contribute $725 off the bat and invest that money in an index fund that mirrors the markets, you'll make an average of 7% a year i know the stock market is a lot more volatile than that, 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 savings right now when your kid is born, by the time he or she is 18 the

value of the 529 plan will have doubled and doubled again. if you started with 75,000, and after 18 years you could have as much as $300,000 that's enough for a fancy expensive private college education and a decent chunk of law school to boot if they don't hold back the price of tuition, it won't even cover the four years but you got to start somewhere i know that most people can't front load a 529 like that, especially not with all the expense that comes with raising a child. it's worth keeping in mind that front loading as much as possible is the best strategy. for grandparents, this may sound kind of grim, but your 529 plan contributions won't count towards your estate taxes. always look on the bright side of death last thing about saving for college and grad school, any money in a 529 plan that you don't use you can transfer to another relative we're talking siblings, parents, even first cousins if you save all this money and your ungrateful kid decides not to go to college, you can withdraw the money from the 529

plan in that case you'll have to pay taxes on any of your gains along with a 10% penalty here's the bottom line no, paying for your kids' college education isn't as important, at least financially as providing for yourself in retirement, but if you have children, then after you've made enough money, enough retirement contributions for the year, if you've made those continributio putting money in a 529 college savings plan should be the next item on your agenda. it's the best way to protect your kids from the crushing burden of student loan debt. stay with cramer ♪ ♪ ♪

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itreat them all as if, they are hot and energized. stay away from any downed wire, call 911 and call pg&e right after so we can both respond out and keep the public safe.

you know i love hearing from you, so let's take some tweets let's kick it off with @scott t. briscoe. you have said to pick like five t stocks in different sectors. do you recommend the same regarding muchregar regarding mutual funds absolutely everything into one fund never diversify among mutual funds. that is just the industry talking and the industry's got it wrong next up we've got a tweet frofrom from @bren triv. i put my first 10-k into an s&p 500 fund, i want you to know do you continue to add money to it or leave it as is? thank you, #booyah

you got the first 10,000 in. after that you start splitting i usually like a ratio of one fift one fifth in individual fund and the other fifth in mutual funds. i am a huge believer in index funds. we have another tweet starting her young, #ten weeks ol old, #madmoney, what can i say that's exactly who should be getting the 529. will you look at that? look at that handsome chap 529 plan, 529 plan right now following tweet is from @j. lou, cramer, better protect a mad money portfolio with gld or bond-based etfs. gld of course. by the way, just so we know i like gold bouillon, too, but you can't put it in your backyard. you've got to keep it in a safe

deposit box. it seems like i got a little advice he has someone told him that short sleeve shirts exist yet? short sleeve shirts and pocket protectors not my style. candidly my mother never liked short sleeve shirts. she always thought i looked bad in them. moving on, we have @wj forest 11 hello, jim, will we ever see stock splits again so small money investors can afford the stocks now in triple digits? what will take that to happen? okay this is a really important point. the big companies have been schooled by both hedge funds and mutual funds that they don't want to pay so much per share. okay in other words let's say they have -- they want to buy 10,000 shares of something. if they split it, they'll be buying 20,000 shares, but their same commission for 20 as 10 in other words it's costing them more to buy 20,000 shares after commission than it does 10 why split, why not keep it the

same that's what the institutions have taught these guys i try to tell companies over and over again that's wrong you're not going to have the right base of shareholders you should split the stock i've had no luck whatsoever. these ceos are only listening to the big institutions, not to you and not to people who watch "mad money. i will continue to do so, but i am losing this fight next we have jerry on twitter, hey, cramer, love what you do. want to start reading your books. is there an order in which i should read them >> i'd actually read them backwards. read get rich carefully because that tells you about how to be involved slowly, and then by the way, i think okay, stick with cramer so it's simple and transparent with a new level of privacy and security. it lives here and here- on your iphone, and it will save you 6% on holiday gifts at apple; like iphone, apple watch,

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demand has never been higher for what we do. creating compelling, engaging, and informative content and experiences. with this merger, viacomcbs will be one of the largest and most influential content creators in the world. i know we can deliver on the full potential of this amazing new company. i like to say there's always a bull market somewhere, and i promised you i'd find it just for you right here on "mad money. i'm jim cramer, see you next time

>> narrator: in this episode of "american greed"... he's called the "mormon madoff." shawn merriman is a bishop in the church... the father of four children... and the head of a thriving investment business pulling in millions. >> everybody wants to be a part of an exclusive club. so you had to get in quick. that's why he was able to take advantage of so many people. >> narrator: but for 15 years, merriman lives a lie, ripping off his neighbors, members of his church... even his own mother. >> he just said, "mom, i have to tell you something very bad." i said, "you took all of our money that we're counting on for retirement?" he said, "yes." >> narrator: shawn merriman is a scam artist. and when the truth comes out,