biosimulation software should be the beneficiary. >> mike? >> lulu. >> tim? >> who are you pulling for tomorrow? >> bama. >> bama by one. georgia by one. next era, all the way. >> steve? f, i'll finish where i started of night swift , have a great "mad money" with jim cramer starts right now. my mission is simple, to make you money. i am here to level the playing field for all investors. there is 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. i'm just helping you make some money. my job is not just to entertain, but to teach you. so come call me at 1-800-773- there is a gaping hole in the american education system, although i hesitate even to

call it a system. when you go to high school, the teacher chemistry, geometry, they teach you physics. english classes, history classes, foreign language classes, you can graduate from college speaking three languages with a deep understanding of quantum physics or ancient philosophy. but, something they almost never teacher in middle school, high school, or even college, financial literacy. i'm not talking about economics. you could be an econ major and still learned nothing about financial planning, or retirement redness, let alone investing. money is just not talked about. frankly, it has become the third realm of market education. you are 1000 times more likely to read marcus, then read anything about planning a budget or certainly picking stocks. that is why i am on a constant mission to teach you how to manage your money, which is what we do every day in the

cnbc investing club, with the childhood trust providing constant sources of examples. when it comes to managing your money, nothing is more important than retirement. sooner or later, you are going to stop working. hopefully, sooner rather than later unless you really love your job. i am betting most of you even if you don't own those stocks, still have some money in a 401(k) plan. decades ago, corporate pensions started going away, and now the 401(k) is the main way that americans save for retirement. they are offered by your employer and are among the greatest tax deferment vessels out there. the i.r.a. -- and i'm not talking about the inflation reduction act, for that matter, i think the individual retirement account. for those of you who were about to change the channel because the whole idea of saving for retirement protrudes sleep -- hear me out, darn it! you need to know this stuff. your future self will thank you for getting our retirement funds in order and while you may think you know everything you need to know about these tax favored accounts, the truth is there is a lot that so- called experts don't tell you or don't want you to know!

first of all, conventional wisdom says that you absolutely must invest in your 401(k), you would be a fool not to contribute. many even advise you to max out on your 401(k) contributions every year if you can afford to. right now, maximum contributions are $20,000 with room for an additional $7000 if you are over 50, but it tends to raise gradually over time. usually, a little bit of inflation. 2004, it was 13,000 per 2023, it was $2500. either way, a serious chunk of change even with these contributions coming pretax. however, sometimes, i think you have the wrong approach. i am not going to sing the praises of the noble 401(k) plan or and tell you it is the key to your financial salvation because 401(k)s can be a real mixed bag. they have some great features, but they also have a lot of bad ones. and those problematic features will eat away at your returns. sometimes, through fees that are almost totally hidden from

you. i do not like that. let me lay out the good, the bad, and the ugly of 401(k) plans and then i will tell you if it makes sense for you to contribute more money to your own 401(k). maybe there is a better way for you to invest for retirement. first, the good. the best thing about the 401(k) is that it is tax deferred. that is right, a tax-deferred investment vehicle. in plain english, that means you pay no taxes on what you put in, and you never pay a penny of capital gains taxes on the profits you make within your 401(k), which allows you to copy year after year, decade after decade, totally tax-free until you start making withdraws. regular viewers know i am a huge believer in the power of compounding. some people call it the eighth wonder of the world. suppose you are 30 years old and you start investing $5000 to your 401(k). if you choose investments wisely, you should have an average return of about 7% per year. at least, historically. and that is being conservative. with that pace over the next 30 years, you will be contributing $150,000. that is pretax income, to your 401(k) plan.

because that money is able to compound year after year without capital gains taxes, by the time you are 60, that $150,000 of contributions should be worth over $511,000. without the tax status, that number would be roughly $110,000 lower. what a huge break! you only ever pay taxes in your 401(k) money once, when you decide to withdraw it. after that, you are taxed on income. and since you will likely be retired by them, most of you will end up paying a lower rate than what you get hit with, if you got tax with that money when you are still in the workforce. that is one huge reason to like the 401(k). the other one, any employers will actually like or match your contributions, for every dollar you invest in your

plan, your business might throw in $.50 up to one point, that is free money for you and also untaxed. if your employer even partially matches your contributions, you should absolutely take advantage of it by putting money in your 401(k). i'm not saying to take the money and run, but definitely take the money. of course, your 401(k) doesn't have any employer match, then it is actually a much less compelling option because as i said before, 401(k) plans can have a lot of options. without the matching, sometimes you are better off saving for retirement via an individual retirement account, or i.r.a. they have the same tax status as 401(k). you can only contribute $1500 per year to your i.r.a. or $700 if you're over 50, an outrageously low amount. i.r.a.s were ruled out in 1975 and since they raise the contribution since them, increase has not kept pace with inflation. if it had, it would be more than $8500. now, i know a person going to $10,000 and i will make it my mission to fight for you to get that. still, there are ways to better yourself. when you change jobs, you can rollover the money in your 401(k) into an i.r.a. and that is exactly what you should do every time you switch employers or find yourself out

of work. what makes i.r.a. the better option? first, the fees. when you invest in mutual fund within a 401(k), you have to pay the mutual fund fees, but your 401(k) administrator, the company that your employer hires to run these plans will also charge you its own fees, and on average they take more than 2%. i find that extortionate. most funds -- you know, they actively manage your money. if you ever looked at your statement and wonder why your 401(k) holdings aren't increasing in value like they should be, believe me, these fees are probably the reason. second, 401(k) plan varies widely. now, some will even let you pick individual stocks. but, others are more limited and only give you the choice of a couple dozen different mutual funds. so, for those of you who can't pick your own stocks or your 401(k), 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 is worth investing in. i spend so much time teaching this, at the cnbc investing

club because i believe it works. you should be skeptical over a retirement plan that doesn't give you the option to buy into mutual stocks. if you can't pick your own stocks in a 401(k), then you want a nice, low expense index fund, preferably from the s&p 500. if your 401(k) doesn't even offer that or charges exorbitant fees, this is the self-directed i.r.a. with a full-service discount. so, you have control over your money. the bottom line with retirement investing, if the company you work for matches your 401(k) contributions up to a certain point, take them for all they are worth. but, other than that, an i.r.a. is the superior way to go, especially if your 401(k) plan doesn't give you any good investment options. let's take calls. let's go to ian in illinois. ian. >> jimmy, how are you doing, my friend? >> very strong. how about you, ian? >> glad to hear it. i'm doing well. >> thank you. good. >> hey, my goal is to get out of my 925 as soon as possible and retire. i am wondering how younger investors should think about the balance between growth

stocks versus dividend stocks. >> this is a great question. i believe you should not bet against yourself. a younger person should be almost entirely in stocks. now, i have been on the extreme on this, but i will tell you, over the course of the last four years that i have been teaching, that has been the right way to go. let's forget about the bonds until you get to at least the mid-50s, and then start adding them slowly. you are a stock guy. you don't want to bet against your life. let's go to michelle in new hampshire. michelle? >> hey, jim. i could use your advice. >> of course. >> my portfolio was doing fine before the interest rate hike, and now it is almost all red, and i just need some tips on how to manage the investments in a down market. >> okay, well, what we want to do is we want to say that we are going to ride through down markets. what we do, we put cash away, regardless.

we are not going to look at the day to day, month to month, or if it comes to retirement, even year-to-year. yes, we want to write stocks, but we will not stop contributing because historically, the rain does go away and if you only invest when it is good, you will end up with not good prices. car washing carl! >> hey, jim. thanks for having me on. >> of course. >> my question is, for the investors, what tools would you recommend? august the, besides the obvious p/e ratio, i mean, how do i evaluate companies for a good investment. >> all right, well, what we do with the investing club -- i know you could say i'm talking out of my butt -- but it is really exactly that. we show you the many different ways to evaluate stocks, and also to pick the ones that are most suitable for you. we can't do that, that is up to you! but, we value the price, we evaluate them on the book, and future earnings, and we also kind of overall value them against other stocks in the same peer group and in the market in general.

okay, if the company you work for matches your 401(k) contributions up to a certain point, take them for all they are worth. but other than that, i.r.a. is the superior way to go. especially if your 401(k) plan doesn't give you good investment options. tonight, school is in session, cramerica. tonight's lesson? financial literacy. i am taking you through all of my top tips to help develop a strong financial foundation. you are not going to want to miss this one. so, stay with me. this is clem.

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lost their minds and decided to turn america into cramerica, you better believe i would make some changes. so, what with the 18th premier of jimmy cramer look like? for those of you that don't get the reference, hulu is your best friend. because this is a show about money, let's stick to the main elements of the cramerica regime. for starters, it drives me nuts that we don't really teach young people how to handle their money. would it be so crazy if you had to take a class on personal finance before you could graduate high school? i think it should be mandatory. they have the health classes -- i mean, come on. can i just take a moment to speak some words that we all believe but very rarely get to say in polite conversation? look, money is important, it's really important, and caring about the state of your finances does not make you seem like some sort of super social -- superficial monster. let's say you have a lousy credit score and you want to get married. congratulations! you have just inflicted your horrible credit on your new spouse.

now, neither you nor your partner will be able to qualify for a loan to buy a car or a home or perhaps even get a darn credit card. these things matter in life. they say money can't buy happiness, but i have always found that piece of conventional wisdom to be dubious, at best. hey, listen, being broke is a major buzz kill. as i know firsthand from the time i spent living in my 78th floor fairmont, six months in california, i wish i had somebody to guide me through this stuff way back then, although i still put money away for retirement when i looked in my car. took it out of my homeowners budget. so, 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 is the only way you are going to be able to achieve financial freedom. and by freedom, i'm in living a life where you are not totally dependent on the next paycheck. teaching you how to do this is one of the reasons i actually put so much time in and created the cnbc investing club.

i'm always thrilled when i see members of the younger demographic taking an active hand in managing their own money. too many people, they start saving and investing too late, making their lives more difficult than need be as they get older. i also know many young people feel they have all the time in the world, and many more start investing before they are ready, truly ready. when they are, in fact, better things for them to do with their money. his wife there are a few lessons for all of those who are recently out of college, you. listen, let's start with the caveat. before you can start investing, you need to pay off the darn credit card. i mean, this is especially true for younger people because banks have gotten really aggressive about offering credit to college students. no matter how much money you rack up in the stock market, if you are carrying a balance on your credit cards, that will meet your returns and over the long-term, the interest on those credit cards will probably be greater than the profits you can make from investing at least on a percentage basis. so, just pay your darn credit card balance in full. in full in each month. automate with your credit card company if you are worried that

you will be tempted not to. when i got out of law school, i had maxed it on half a dozen credit card. i took a job at goldman sachs, the firm everybody wanted to work at and made good money out of the chute, but not enough to pay all that interest and be able to afford the iggest boombox in the world, which of course was my first priority. so, i paid down the debt pronto and got my boombox later. i will never forget how proud i was with that box on my shoulder swinging in the breeze as it worked my way from my 46 square foot studio. the point is, credit card debt is onerous. even if you are hitting it out of the park with your paycheck, as i was. they are the house. they win, you lose. now, let's get advice to young investors. first, this advice is for everyone out there regardless of age or education level, but it is especially for fresh college grads. you need to save money. i recognize that not everyone is in a position to save, we can't all be natural cheapskates, and nobody likes being nagged about this stuff. so, however, the stock market is a great way to trick yourself into saving a part of your paycheck you might otherwise go spend.

investing in stocks can be fun, let's say if you join the club, you will get this. whereas leaving money in a savings account or certificate deposit feels churlish for most people. even when they are giving you decent interest. plus, when you invest your savings in the market, it will be a lot easier to resist the temptation to spend that money on things you don't need because you will have to sell your favorite stocks to get cash back. it is a great way to keep your money in and not out, being spent in a way that i don't think will ever help. a second lesson for young investors, this is a much more targeted piece of advice. while you are still young, you can afford to take a lot more risk than say an old guy like myself. when you're in your 20s, you can get away with more reckless strategies, like owning single- digit stocks, for potential upside used, but so was the potential downside. or, you play with options. i'm fine with that. why is that? it is not because young people are naturally better speculators. it is because when you make a mistake with your money in your 20s, you have the whole rest of your life to fix it. losing money is less of a problem when you have 40 odd

years in the workforce to earn it back, and like they say, for me, older investors do need to be more cautious. the closer you get to retirement, the more conservative your portfolio must be. yes, we will have some bonds. utilities. if you are speculative stocks training single digits, but if you're in your 20s, you should invest like a young person, not chemical person. i get too many people calling thing, i have 40% bond because i'm 22. are you kidding me? you shouldn't own any bonds. people take this advice to heart, especially when you expect the most recent college grads most likely to invest in the market are the ones who are most responsible and most prudent about their money. prudence is great when you are putting together a budget to live within your means, or deciding how much of your paycheck to see each month. but, for young investors being prudent is actually reckless. twentysomethings, live a little, at least in your stock portfolios. take some risk, play around with speculative companies. there are some biotech companies with a lot of potential. even when they blow up, you have

the whole rest of your life to earn that money back. don't forget, stocks to stop at zero, one of the greatest things about them. oh, and that endless bernard that you can't save until ou pay off your student loans? please. have you looked at how low that interest rate is compared to credit card debt? i just invested my money when i got out of law school, and after paying my credit card debt, i still invested knowing i could beat the student loan bill be. didn't pay that off in a hurry. pay some of it off, but please, don't be hurried up about it. i would rather have you invest now and pay later. plus, going to push various forms of student loan forgiveness whenever they are in power, meaning if you drag things out, you might end up paying less. finally, for young investors, like i said before the break, it is never too early to start investing for retirement. use your 401(k), if your employer will match part of your contributions, as i told you earlier. put some money into a roth ira,

which is ideal for younger investors, and that i will explain to you later. here's the bottom line. for young people just out of college, investing is a great way to trick yourself into saving money you might have otherwise spent. remember, when you are young, you can afford to take a lot more risks with your portfolio and it is never too soon to start contributing to your 401(k), or i.r.a., especially an i.r.a. -- that is a roth. "mad money" is back soon.

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boom! at&t internet that's why i'm chief technology officer but all you did was plug it in, you didn't do anything neither did you exactly exactly exactly exactly impressed? honestly, a little exactly (slurp) we live in a world where

you have more choices about where to invest your money than ever before. a virtual infinity of etf's, mutual funds, you name it. but, more choices isn't always better. sometimes, having more options makes it impossible to decide which ones are right and which ones are wrong. you have never had more options when it comes to picking exchange traded funds and mutual funds than you do right now. they are everywhere. at this point, there are so many different kinds that it can make your head spin. the companies that run these funds, they want your money, and one of the basic mistakes you can make as an individual investor is to give it to them with a few significant exceptions. this is one of the most common money mistakes out there. in fact, most people in this country shgreat at investing, with putting their money into mutual funds. some 80 million people --

basically half the households in america -- have exposure to mutual funds. many of you don't have a choice, 401(k) plans don't let you pick individual stocks, they just give you a menu of mutual funds to choose from, which is a major reason why i prefer i.r.a.s. this is why i spend so much time teaching you how to do it, both on this show, and of course, the cnbc investing club. we will walk you through the whole process in extreme detail every day. what exactly is so bad about those mutual funds? well, simple. if you are investing in mutual funds, you are likely getting a bad deal. now, i don't want to paint a brush, there are some goods with mutual funds and i will tell you how to find them in a minute. but, you need to find the mutual fund business model that no one talks about. actively managed mutual funds, mutual funds are people deciding which securities to buy or sell. unlike hedge funds, mutual fund managers don't get paid for performance. they collect fees from their investors, people like you. and the amount of money they make depends entirely on the size of their assets under management, which means that

the biggest incentive is not necessarily to deliver a good performance. no, what they are really being good at and what they get paid for is to fund raise. and that is part of the reason why in study, after study, after study, year, after year, after year, it has been shown that the vast majority of actively managed mutual fund managers underperform their benchmarks. in other words, if you invest in an actively fund for stocks, then it will probably fall short of the s&p 500. to make matters worse, despite consistently underperforming in market, actively managed mutual funds still have some of the highest fees in the business, so even if your fund does managed to beat its benchmark, the odds are good that any outperformance will be eaten up by big management fees and you end up with a new investment that makes you less money than a cheap index fund that mirrors the s&p 500. that is some industry. that is from business, much more sink or swim. compounded 24% annually all fees, versus 8% over the same period.

i fight every second of those fees and even chose not to take them during a year when i was only up a couple percent versus a strong performance with the averages. yes, i was that ashamed. does the mutual fund manager do that for you? you can read all about it in my tell-all, that is in my two -- tell too much autobiography. this is where i say not all mutual funds are bad. some of them have fabulous managers who consistently get terrific results. but even here, there is a major problem. when a mutual fund delivers great results for a long period of time, if the manager is a decent person, they will stop accepting new investments, because once they get too big, it is impossible to generate the same kinds of gains. so, a lot of these high-quality funds are out there but they don't take new money. if the manager is not a great person, they will keep taking more and more money until the performance starts to suffer, hurting you. for the late great john bobo, the father of the index fund,

he asked me how i could be the averages so consistently in my hedge fund. i said i limited my investors, made it like a club where you had to be nominated to get in. that means i was never overwhelmed with money, something that often leads to bad investment decisions. he praised me. he said, if everyone did that, they would have much better records, too. maybe that was the real secret to my hedge fund multiyear outperformance. by the way, if you want to know the other secret to that success, again, that is what we teach in the investing club. back to managing mutual funds. for the most part, they are not worth it. the features are too high. the evidence that the bulk of them underperform is just too staggering. your best strategy is to prepare a low fee index fund with a portfolio of individual stocks that you picked your self. that is what i talk about night after night and preached to club vendors. but, for those of you that don't have the time to research individual companies or if your 401(k) plan is just going to do it, let me tell you, the smart way to invest in mutual funds. ideally, you want a cheap, low cost index fund that mirrors the market as a whole. one that mimics the s&p 500. index funds have ultralow fees and with an s&p index fund, you have to be able to participate in the strength of the market without taking the time picking

individual stocks. remember, the whole point of putting your money in a mutual fund is to save you the time and effort required to manage your own portfolio stocks. that is why i think it is insane when people start owning multiple mutual funds. by its very nature, funds should be diversified. now, i know there are lots of sector-based mutual funds out there, but there is really no reason for home gamers like you to have any exposure to those. if you take the time to try to play individual sectors, that time would be much better spent picking individual stocks. as for the ets in most cases, these vehicles are for trading, not investing. many rebalance every day and that can take a real toll on any kind of long-term performance. you can lose a lot of money, even if you are right. of course, there are plenty of exceptions here, too, like the gld, which i like. and i like the s&p 500. but, in general if you are not a pro and not managing a

portfolio or mutual stocks, then you should be very careful about fooling around with most of this stuff. here is the bottom line. 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. better than the vast bulk of actively managed mutual funds. but, an index fund owns everything, the good, the bad, the ugly. if you do have the time to do your homework, i believe you could be the performance of an index fund by picking stocks yourself, maybe leaving the bad and the ugly out of it. if you have the time, stick with the index fund. or, join the investing club and we will help you do the homework. let's go to eric in tennessee. eric? >> hey, jim. this is eric from park city. my question is in regard to fundamental valuation of a stock. if you only had access to the four indicators to examine, what four measurements would you choose to look at? >> okay, i would look at sales, i would look at earnings, i would look at markets, and total adjustable market for what it could be. all of those -- if you told me

that was x, y, z, i could tell you what i was thinking, provided i had historical data in front of me. let's go to perose in california. perose? >> hey, jen, just wanted to thank you for your show. it has been a great learning experience for me, learning the markets with you. >> thank you so much. >>, you're welcome. i really appreciate it. so, i just wanted to ask you a question here. i know joe is a huge friend of yours, and i am huge on fundamental and technical analysis, used them both to make my investment. so, my question is, even though a company is showing strong fundamentals, is it a good idea to incorporate technical analysis, as well? >> always. i think everything should be included, and i will tell you why. because whatever makes decisions, and a lot of big fund managers use those decisions and use technicals, that means you should include them in your thinking, too.

even if you think they shouldn't. all available information that is good to go into your decision-making, including technical analysis. an index fund owns everything, the good, the bad, and the ugly. so, if you do have the time to do your own homework, i believe you can beat the performance of an index by picking stocks yourself. much more "mad money" -- i'm giving you the lowdown on financial security from college to on your way to retirement. one of my colleagues, jeff marx, will join me to answer some of your burning questions. so, stay with cramer!

no matter how good you are at picking stocks, you have to

know a few rules about what kind 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 some terrific fees or losing a fortune to hidden fees. i know this stuff isn't as fun as picking stocks. you know i like to pick stocks, but over the course of your lifetime it really can help you load up more wealth than a couple of great stock picks. the question is, i don't want you leaving the money on the table just because nobody can be bothered to explain it to you, for the finer points of retirement investing. with that in mind, let me explain whether it makes sense to use a regular 401(k) or an i.r.a., or for you to go with a roth ira, which is a term i am sure you have heard countless times. i know i have talked endlessly about the benefits for using the individual retirement account and i.r.a., for short and 401(k) to save for

retirement. i don't want to beat a dead horse, here. but, this is a subject i get a ton of questions about every day. should i put money in a roth ira account or a regular one? let's start with a roth ira. anyone can contribute to, unless they make less than $153,000 per year. i think aside from the earned income tax credit and all the temporary covid stimulus, the roth ira might be the single greatest thing our government has done for low income families since the end of the war on poverty, which at best ended at draw with poverty possibly winning on points. i make the limits for the i.r.a. investing the same as limits for 401(k). that will be a theme for the rest of the year. but, doesn't seem to care because they make a lot more money off of 401(k) plans. there is no other reason i can find for what you can contribute roughly three times as much money to an i.r.a., i'm sorry, to a 401(k) as an i.r.a. three times, 401(k) over i.r.a. let's say this. you put $10,000 in an i.r.a. per year, much more than the

current cap. and even higher than what the contribution than it would have been if you just started in 1975, and adjusted the initial guidelines for inflation. yes, i am championing $10,000 or bust. i am your friend on this and i will not stop until we get it. i told you all about our regular i.r.a., let you take pretax income, invests it, and then your gains can compound year after year, decade after decade, totally tax-free until you decide to start withdrawing money, once you retire. but, a roth ira, that works different. with a roth, you make contributions using after-tax income. in other words, unlike a regular i.r.a., putting money into a roth won't decrease your tax, though, at least not up front. on the other hand, once your money is in a roth ira, you will never pay taxes on it again as long as your cash remains in the account. you don't pay capital gains tax, dividend tax. and what you can do without penalty after the age of 59, and don't pay any income tax on your withdraws, none. basically on the roth, you pay taxes now so you don't have to

pay any income taxes when you are retired. there is one positive point about a roth. after five years, you can withdraw the money you have invested. and you won't get hit with a 10% penalty, which is what happens when you try to withdraw money from a regular i.r.a. before you hit that matching age of 59 1/2. that is very different from a regular i.r.a., we don't pay any taxes to your contributions now, and your gains don't get taxed within the account, but once you start withdrawing the money, every penny you take out is tax, and t is taxed at ordinary income, which means if you are trying to decide between a roth ira, 401(k), and regular i.r.a. or 401(k), you need to determine whether it makes more sense to pay income tax now with the roth, or to wait and pay income tax once you have retired with a regular account. in short, you are trying to figure out whether you will be in a higher tax bracket if you retired or a lower one. this is obviously competent in

question, there is a lot to do with the specifics of your situation, your career, and simply how old you are. for anyone whose marginal tax rate is 22% or less -- which is most of america -- i think you go with a roth. better to take the hit up front then to allow your roth ira to compound tax-free for the rest of your life. remember, for those of you that don't have the time to pick your own diversified portfolio, the smarter thing to do is to just park your retirement money at a low cost income fund that mirrors the s&p 500. as you get older, you can add some bonds, but really until you actually retire, stocks should make up the lion share of your retirement investments. i know i have said this before, but i will keep repeating it until they take me off the air because this is so necessary and contrary to the conventional wisdom. how about a roth 401(k)? this works just like a roth ira, meeting make contributions after-tax income and never pay taxes on that money again except because it is a 401(k) plan it adds again a much higher contribution limits and an i.r.a.

there is one big difference. 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 rothas long as your employer decides to give you the option. of course, all these decisions depend on what you think the future will look like. if you believe taxes are 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. and if you are making a lot of money in the present, at the end of the day, though, this is both beyond our control and beyond our ability to predict. the bottom line, the lower your present in, the lower your tax rate. a roth ira lets you pay those low rates now and never worry about taxes again for your retirement money. so, the less money you make, the more likely that a roth is for you. it is that simple. and when you are saving for retirement, don't worry about what could go catastrophically wrong 30 or 40 years in the

future. just think about making the best choices right now. "mad money" is back after the break. when it amgen's life-changing medical breakthroughs, every second counts. but without investment, those breakthroughs are often paused. citi's seamlessly connected banking, markets and services businesses, deliver global financial solutions. so our client can keep investing in innovations for patients around the world. without pause. for the love of moving our clients forward. for the love of progress. (office chatter) is it me...or is work not working? at least, not the way it could work. your people are buried in busy work. and you might be thinking... can ai make it all work?

can ai help your people work... without all the workarounds? feel better. make customer service work the way customers expect? that one. make your old tech work with your new tech? thank you. and todd here is wondering, can ai do all that... now? no pressure. it can. on the servicenow platform, ai transforms your entire business. your people work better, your customers are happier, and todd... well... he's practically euphoric. practically. because when your people work better, everything works better. so what are you waiting for? let's get to work. idris elba works here? mm-hmm. ya, he's super nice. awkward question... is there going to be anything left... —left over? —yeah. oh, absolutely. (inner monologue) my kids don't know what they want. you know who knows what she wants? me! i want a massage, in amalfi, from someone named giancarlo. and i didn't live in that shoebox for years.

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(vo) at verizon new and existing customers can get iphone 16 pro on us. when you trade in any phone in any condition. only on verizon. lately, we have heard a lot about the crushing burden of student loans. and what the government should or shouldn't do to make some of that burden go away. we lived through a years long moratorium on repayments during the pandemic, which helped supercharge the economy. kids who graduate with no debt end up being worth a lot more money than their classmates who had outstanding student loan balances.

although, as i said before, student debt is a heck of a lot cheaper than credit card debt, so really don't sweat the program too much. the problem here, there is simply so darn much of it and you can't get rid of it in bankruptcy. so, for any of you, who are parents or thinking of becoming parents, let me just 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 of their college education as you can afford. of course, if i were to make a kind of hierarchy of financial needs, i would tell you that it is more important for you to save and invest for retirement, which is what i talked about earlier in the show. why prioritize yourself over your children? simple. if you don't have that retirement money, who do you think is going to support you? your kids? if you ever want grandchildren, you will want a retirement fund, otherwise your children will spend ages taking care of you, instead.

however, if you saved up for retirement in a given year, then it is time to start thinking about college, even if your kid is only a toddler. the best way to save for college, hands down, is through what is called a 529 plan. these plans vary by state, but the general rules apply across the country. there are two kinds of 529 plans. first, some states let you use a 529 as a hedge, as a hedge against tuition inflation. you can buy college tuition credits at today's prices, then use them in the future. that is not what i'm talking about, though. especially not in a world where major national politicians are talking about making tuition free at public universities. no. i want you to use a 529 savings plan. again, these are run by states, but generally speaking, a 529 doesn't let you manage your own portfolio. you have to pick between a mix of different mutual funds, like with many 401(k) plans. this is not my favorite way to do things. i prefer you to have control over your assets, but 529's have so much growth that i am willing to swallow this one flaw. remember, when you can only choose between funds, go for a

low-cost fund that mirrors the market like an s&p 500 index fund. so, what are the rules for a 529 plan? let's say you just had your first child. congratulations! if you can afford it, you should start a 529 with your kids as the beneficiary, right then and there. that's what i did. well, maybe with a couple of days. after all, you just had a baby, although i didn't. anybody knows i traded big blocks throughout the whole birthing. admittedly, not my finest hour, although the trades worked out financially, although it didn't really help things at home. here is how a 529 works. the contributions are not tax- deductible. so, you are paying for this with after-tax income. once your money is in the 529, you don't pay any taxes on your gains, so they can compound tax- free, year after year, which is what i like so much. it is a roth ira except for college, rather, retirement. because of federal gift tax laws, you can contribute 17,000

per year if you are single or $34,000 if you are married and you file your taxes jointly. that is a heck of a lot of money. oh, and by the way, your kids' grandparents can contribute to the same 529 plan, too. and if you don't have the money, a grandparent can also start a 529 with your kid is the beneficiary. for financial reasons, it is better to have a parent to do it. 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 frontload five years worth of contributions without incurring a federal gift tax, as long s you don't write any checks to the plans beneficiary over the next five years, which is not hard because who writes checks to a 7-year-old? in other words, a single parent or grandparent could potentially invest $85,000 into a 529 plan right from the start, or if you are married and filing jointly, you can contribute $170,000. the next five years after that, you won't be able to contribute

anything without getting hit with a gift tax, which is something you don't want. but honestly, what you have dropped that money into a 529, you won't have to make that many more contributions. the key here, though, is you want to get that money into your kids' 529 as early as possible. that is because the greatest of these plans is all about the power of compounding. given that you don't pay taxes within the 529. if you can contribute $85,000 right off the bat, and invest that money in a low-cost index fund that mirrors the market, the rule of thumb is that over time, you will make an average of roughly 8% per year. 80%! then, by the time your newborn is 18, you should have tripled your money, $85,000 turns into $340,000. that is enough for a private, expensive college education and a chunk of law school, to boot. i know most people can't upload a 529 and pay into it like this, but if you can frontload, it is the best strategy. oh, and for grandparents, this may sound kind of grim, but your 529 plan contributions one

count toward your estate tax. hey, to borrow a line from "the life of brian," always look on the bright side of death. last thing about saving for college and grad school, any money in a 529 plan you don't use, you can transfer to another relative. we are talking siblings, parents, even first cousins. by the way, to save all of this money and your ungrateful kid decides not to go to college, you can just withdraw the money from your 529 plan. you can just take it. although, you will have to pay taxes on any of your gains along with a 10% penalty. here is the bottom line, paying for your kids' college education isn't as important as providing for yourself in retirement, at least not financially. but, if you have children and you have made enough retirement contributions for the year, putting money in a 529 college savings plan should be the next item on your agenda. stick with jim cramer. so this is pickleball? it's basically tennis for babies, but for adults. it should be called wiffle tennis. pickle!

yeah, aw! whoo! ♪♪ these guys are intense. we got nothing to worry about. with e*trade from morgan stanley, we're ready for whatever gets served up. dude, you gotta work on your trash talk. i'd rather work on saving for retirement. or college, since you like to get schooled. that's a pretty good burn, right? got him. good game. thanks for coming to our clinic, first one's free.

nate jones... lines things up... checks his fidelity app... looks to outside analysts to get a second opinion.

nate likes what he sees... and he places the trade... talk about easier investing.

and he places the trade... talk about easier investing. narrator: tonight on "shark tank"... there's a new sports drink in town, and she's got game. [ laughs ] walsh: i don't know about you, sharks, but when i win, i want everyone to know. whoo! oh. we have sold a little over $2,000. $2,000? greiner: whoa! i think you need a job. this is our full-time job right now. that's not good, guys. [ sniffles ] can i -- can i -- can i -- can i... god, i just want to -- can i just tell you a story? -- captions by vitac -- ♪♪