my mission is simple, to make you money. i'm here to level the playing field for all investers. i promise to help you find it. "mad money" starts hey. i'm cramer. my job is not just to entertain but to educate you and to teach. call me or tweet me at jim cramer. i want to talk about not just owning stocks in particular. it is one part of building

make enough money to become truly rich. for the vast majority of americans that is not enough. you need to work with it. i will tell you how to do that not just for the next year but for the rest of your life. usually i come on here and tell you what i think of the market. the truth is before you start investing in stocks there are a lot of other want the payoffs to mean something. you may not want to hear this but it's fruitless to think you can get rich in stocks if you haven't built long term wealth beforehand. what do i mean by that? simple, if you're hemorrhaging money everywhere else a healthy portfolio isn't going to do much for you. if you plan things better it

necessities. three things you must take care of before you consider owning a stock. i don't address these normally but here on mad money some times i feel like i'm being remiss. very few colleges will teach you how to manage your finances. it doesn't mean i can't offer personal finance mad money phone calls and e-mails many of you crave this kind of education. you just ask for it every day. i'm done ignoring it. it ends tonight. what are the three things you must do before you own stocks. first and you have heard it a million times, sucks the fun out of everything. you have to have to have to pay off all of that credit card

i'm not one that believes they should be cut into piece and turned into a nice mosaic or that they are evil or should be burned but i do knowledge the facts. the facts are if you have credit card debt you're pag extraordinarily high interest. you're paying a loan shark. kneecaps if you can't pay them back but they will financially kneecap you with whatever you have been able to build up from your paycheck or other investments. like many aspects i have one time or another brushed up against the down time. between college and law school i had very little money left to

i ended up living in my car. i still managed to put a few bucks away. by the way, his first book, one up on wall street remains understanding the market. it's in amazon. even though i was already in hock to a lot of people i owed money to the c companies found me. i always figured you could pay the minimum and keep stringing everybody out. credit issuers never seem today mind. i remember i had four of them going each month and i got one more. i said what the heck, why not? when i added up the minimum payments and charges i realized they amounted to my biggest expense after my rent.

non-credit card debt with a collection agency. they found me and their payment plan gave me enough breathing room to get by until i went to law school. there i was able to get legal work. almost every penny went to the darn credit card companies. there was still nothing left for me. i able to pay the bills off rather quickly. in the end i couldn't stomach opening the mail. not everybody was as fortunate snagging a job within several months of work. i say there's no way you can make enough money away from the card issuers to save in any meaningful way let alone pay rent and put a meal ton table.

if you're burdened by credit card debt even with good credit you'll pay around 15% annual interest. if your stock portfolio that's a darn good year. if you have a big balance on your credit cards pretty much all of your gains will be sucked down the drains. there's nothing you can do about it. it is simply credit card debt stocks will be a hobby for you. all of the wealth they generate will be destroyed of credit card debt. >> the house of pain. >> i know i probably sound like your parents here but your parents are right. i say there are three things. the second is health insurance. you should not invaes penny in the market until you have health

insurance or pay a fine. the penalties aren't big to start but they do get biller over time. there isn't any choice here. even if you object obamacare it is idiotic to pay a fine. there are all kinds of subsidies to make the costs more bearable. honestly though you shouldn't need legislation to. it is i have been there too. i have no health care plan and had to drive hours to get to a farm workers clinic. i couldn't get the care i needed. i know you don't think it could happen to you. believe me, you're not. you don't want to be exposed to not owning health insurance. one illness it can crush all of the capital you spent building.

have a preexisting condition but it's a lot cheaper to buy it before you get sick. you'll need it at some point. before you start investing in stocks you need disability insurance. the rational, without these you can get wiped out in a second. all of the gains you wrapped up in the stock market will be wrapped up for nothing. you will have to use it to support yourself while unemployed and injured because disability insurance. you have to pay off your credit card debt and get health and disability insurance. you have no excuse if you also think you can afford stocks. these are more than just items on a personal to do listment they are essential elements. we talk about capital appreciation. we always knowledge the capital

you need that to protect your money in the present if you want to grow it in the future. pay off your credit card debt are the three most important without them investing doesn't make any sense. why bother? with heavy credit card debt and without health care building wealth can be f zadie in connecticut. how are you? >> caller: i appreciate you taking the time to call me back. >> of course. >> caller: i am 67 years old now and i have $67,000 in a 401 k but i had good returns. i don't know if i should roll it into an iro.

a 401 k? >> i was in fidelity for a while. >> you should stick with it. you're in good shape. stick with it. i think that's a good opportunity. some people are really locked in. let's go to mike in new york. >> caller: hey. how are you doing? >> how are you? >> caller: i'm good. i have a question concerning city pensions. i have been in the city pension system for over what is the difference between 457 plan roth ira and the pros and cons? >> i'll have to ask you to check with your people at your pension plan because the 457 deferred plan i'm not sure how that works. it is too important. i'm very sorry but that's a personal decision to you and i

situation. before you can think about investing in stocks make sure you're building a foundation for long-term wealth. then we can create a portfolio together. you know i want you to be diversified. i'll show you how to balance your retirement plan. should you ever tinger be your contribution level? i'll tell you when it makes sense to add "mad money" will be right back. why are you checking your credit score?

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>> tonight we are talking about a subject we don't spend enough time on in the business media, long-term wealth building. if you're serious about getting rich and staying that way you absolutely must do two things. go to amazon and buy the entire

the second thing to prepare for retirement fechb you're in your early 20s and just started working, you have got to start saving now. i didn't say save for retirement. i said prepare. stuffing your bank into your mattress or saving it in an ira, great they may be they might not be enough to prepare for retirement. you should take an active hand in setting yourself up for retirement, really getting involved with your money, getting your hands dirty. with that minimum reward not worth the risk. that's what i'm here to help you do. young people don't turn off the tv. if there is anyone that can make it sound interesting you need to

wouldn't you rather learn from a guy who has been around for ages? all right. i promise to actually give you useful advice you can't just find on the internet. so many i think it's not worth calling the stuff advice anymore. you should save but how? should you put it in an individual retire yes. yes. you should. it is just a fact. people make careers out of saying use your ira. cut up your credit cards. pay your bills on time. don't spend more money than you make. all great advice people in america already knows but there are people that will still tell you just that, just those points and assume it's enough to help you get ahead.

basic financial responsibility is a jumping off point. i'm the guy who tells you where to go from there. i didn't make a career out of giving people money advice. i made a career out of using money to make more money and i came to this gig later in life. how from the perspective of a money manager like me should you go about preparing for retirement? what useful advice beyond using because you don't pay taxes and you don't pay taxes allowing after years after years of tax recompiling. how about what you should not do. convention says you should put money in. it leaves you on your own at the beginning of a highly confusing process. what should you not do? don't use much of your 401k to

i'm far from company stock is still the most popular out there. more people put their retirement dough. i cannot stress how putting too much money in the stock of your company is. it must be one part of a much larger pot. why? every week you call in and tell me your top five tell you if you have all five eggs in separate baskets. when it comes to investing diversify case is the only free lunch out there. regular viewers know if you expose too much of your portfolio to the same sector you're running an enormous risk.

for years. let's say the beginning of 2013, a little more current. your entire portfolio, this had been performing well for years. bond yields were so low. it meant investors had no choice. but in the spring of 2013 interest rates began to rise violently. increased dramatically. they got crushed because they finally had real interest rate competition. if all of the portfolio or one-third of it was made up you lost a lot of money even though the first half of 2013 was fabulous as a whole. that's the danger of not being diversified. we will get more interest rate spikes. you have to diversify. apply that logic.

same company that's paying your salary? that would mean your putting your savings in the same basket as your -- what if you worked for more recent less unsavory or any other company that goes under? you lose your job. you lose your retirement savings. you think it's conjecture. i used to have a radio show called real money. i got a number of calls telling they came back and explained they needed to diversify away from enron. each time i heard about how such a company was too terrific to sell or the fact is it was down so much they couldn't sell. one day it was gone. many people have made this

you probably -- i'm telling you the excuse doesn't cut it. you have got to cut back. cut it back tomorrow. here is the bottom line. diversify case comes before everything else when you're investing. especially if you're investing for retirement and 401k. never put more than one fifth in the stock of the company you work for. doubling down is okay more than that. remember, that's what you're doing. you're doubling down. stick with cramer if you want to know more about how to manage your retirement so you can build lasting wealth for you and your family. americans are living longer. i'll pep you fill the golden years.

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anyone who tells you they have to make obscene amounts of money overnight is some type of -- how about the meth operation on breaking bad? he came on mad money and talked about his product being like apples. he didn't need the fabulous distribution network. that blue meth sold that ended real bad. the best most reliable way to make your money grow is to do it slowly and prudently. we are talking about long-term wealth building. this applies to all forms of investing. i know retirement money meant to be with little risk taken.

rates that you could be too cautious, too prudent and too risk. when you're managing your money there's a point all of it can become like recklessness. this is something you see. i like to say you invest retirement. don't save. saving makes it like you had to sock the money away. maybe a money market fund. maybe a long-term bond fund. so fine. that is not how it works. not these days. not this age. most people when they are putting money away for retirement feel like they shouldn't take on too much risk, that it is too much by investing them in stocks. stocks can go down. you don't get your money back when they do. if you shun stocks and cling to

all that intelligent right now. investing none of your 401 k is far more likely to jeopardize your retirement savings in the long run than investing everything in stocks would be. why? when you're investing for retirement you need to generate enough money to -- if you load up on bonds in 40s avoiding stocks because of the risk you'll never generate enough to retire comfortably. if money you will probably be safe but that's all it will be. it's not enough to get a low single-digit return. with that low rate you're barely going to outpace inflation. you also have to factor in the

using your money to make more money, perhaps a lot more money. bonds aren't always the aof safety either. bond prices are going to fall and faster rates rise if harder the bonds will fall, something truly felt by anyone who puts money in a long-term bond fund which can lose money if rates shoot up if the federal reserve doesn't raise rates. say that. it means that you likely won't generate enough to retire when you want to. there are times when bond prices have a downside risk. they can certainly drop enough to erase two or three worth of coupon payments as okay. what else falls under the category of recklessness?

popular 401k? stable value funds. this is just a type of fund that gives you a slightly better than and -- unlike bonds they have insurance wrappers. if the return is then the smaller term is even worse. the definition of become prudent you become irresponsible. help you use your money to make more money. it requires work and you can't be on auto pilot as so many of you are. when you're in your 401k put money into stable value bonds you're taking it off the table. you're saying i just want to keep it safe. you can't really have it both ways. if you cling to safety and you

younger. while money can't buy happiness, being broke is a pretty sure way to be miserable. i'm not saying there's no place for bonds. there is when you get older. you will start using that money shortly. stocks come first until later in life. was shorter and interest rates weren't kept down and european economy makes their wonds unworthy creating with have low yields. corporate bonds offer yields that used to be chin si. those that bought some of the big corporal offerings, the long-term might do better owning

401k plans vauchb limit options. find one that mimics the s & p 500. the kind of stocks that have been proven study after study to invest in pretty much any 20-year period. you can take it and put it into high quality bonds. keep 10 to 20% in bonds when you're in your 30s. in your 40s you can keep it up to 20 to 30 of your percentage and in your 50s it's 30s to 40. this may sound extremely aggressive but it's the best way to generate the way you need to retire when you want to. once you retire you should still

it could generate income. i think they should be about a third of your portfolio. i know that's aggressive but i have to give you what i think is right. this is very much countered that says you should have more bonds but the conventional was coined when people had much shorter life spans. if you want to provide for yourself you'll need the extra upside. eventually that safe money and bonds will run out. notg retire is a bet against your own longevity. now you have your first principals. stick with cramer and i'll give you more specific tips to make even more money. sean in new york, sean. >> caller: hi. thanks for taking my call. my uncle got me hooked on your show and i'm a big fan. i recently graduated from law school.

non-existent tax rate and maxed out my roth ira from my summer job. i want to know how to invest more agrifszly. >> yeah. you have got to get into an aggressive mutual fund. in the next ten years you got a shot to make a lot of money from that. ten years from now you can then pull back from it. this is your chance to money because you have the rest of your life to make it back. this is dan in florida. >> caller: hi. long time, first time. >> yes. >> caller: i would like to hear your thoughts on a strategy regarding companies that have had consistent come pouned annual growth over 10% per year for many years. >> i always say to people how can you buy and hold them if they have consistent growth if

consistent. i have seen it time and again. i remember a company called time and equipment. it kept doing it and doing it and doing it. one day it disappeared. doing it and doing it and disappeared. these are all companies that defined that, what you just mentioned and one day they missed and then they missed and then they missed. can't have that happen. going into your golden years learn to make your money work there's more mad money ahead. taking things up a notch. i'll let you know when it's right to double down. the 401k gets all of the hype. there are other ways. we'll weigh out your options. then your tweets.

if you're looking to build the foundations of learn-term prosperity unless you just like sound effects first and most important step is to set yourself up for retirement. i'll tell you more about using the latter after right now we'll share with you my favorite piece of 401k advice. it is based on how i manage my own 401k. you know what i am about to tell you is worth hearing. most people will take advantage of their 401k plans on a monthly basis. usually it is taken right out of

plow in one twelt. i am not one of them. why not? there will be times when the market takes a big hit, a nasty hit. i think you want to capitalize on that. why would you contribute the same amount when stock prices differ radically? would you really want to invest the same amount near a top as when it is absolutely not. here is how eye take advantage. when squlou a real long time and stock market are opportunities to buy not reasons the weep, moan and pel your hair out. when you get a 10% decline you got to double down in your contribution. that month you put in twice. it is one sixth of what you plan

entire year that you usually invest. if it stays down you might want to do the same thing the next month. beyond that you might want to wait another quarter before you double down again. might not sound like it would make a lot of difference but i can tell you it does. if you embrace and double down when the mashlgt declines you will make more money than you would than if you contributed k. i am talking about investing in a low cost s & p 500. you probably can't find a mutual fund like that. they are so limited. it is usually best to stick with an index fund. that's what you're doubling down. will it make a huge difference?

mean tens or hundreds of thousands of extra dollars because you took the time to observe what was happening in the market and adjust your 401k contributions accordingly. here is the bottom line. pay attention to the market so when you get a 10% decline you can double down and invest twice your 401k and take advantage of the cheaper merchandise out no different than a sale at your local department store. that's right way to manage your

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while we are on the subject of long-term wealth building i need to tell you about the limits of what some consider the

i have given you all of the dos and don'ts tonight. it could be a vital part of setting yourself up for a cozy retirement. i'm not one that says max out every year. that would mean putting in 18,000 a year which is the limit on contributions. your 401k is important but it has its you'll hear people site high fees that eat away at your retirement capital. no question about it. for mine is lack of control of your money and lack of choice over what you can invest in. i believe the best way is to buy a diversified portfolio on individual stocks so you know when it's time to buy more and when it's time to sell and when it's time to sell everything which is very rare, by the way with. most 401k plans don't give you that option.

even though you can lobby your human resources department. most of what you have to choose from isn't all that great. i don't know if i would waist my time trying to change those things. it's why we don't have -- an ira doesn't have the high management fees. it lets you invest your money the way you want to. makes it a sue peer big picture difference is your employer will match at least some percentage of your contributions up to a certain point. that's free money. you would be a fool not to take it. there is usually a cap. sheer my rule of thumb. contribute as much money in your 401k as needed to get the full company match and stop right there.

maxed out your ira contributions. put the rest into an individual retirement account. if you want to whether use regular or roth ira pick up a copy of stay mad for life. that's the personal finance book. it gives you much more detail. for now we are talking regular ira and you pay no taxes on any year after year tax free until you start withdrawing it. it is still a pretty sweet dealment you can only pour $5,500 into an ira unless you're over 50 in that case you contribute 5,500 a year. do that after you milked your employer dry.

money go back and put it in your 401k after you maxed out your ia. you should only contribute as much money as it tacks to get the full match from your employer and after that all of it should go into an individual retirement account. if your 401 k has no employer match start by contributing to your ira and keep going until you max it out or 6,500 if you're over 50. "mad money" is back after the

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our first tweet who asked how do you take advantage of the correlation among, not between stocks, bonds and money markets to steadily grow. it depends on your age. if you're a younger person i don't want to see any, just compound as you get into your middle ages you can start loading up in bonds. we need to make money with our money. next, at ryan myer. i'm looking at dif dent stocks. what evaluation do i review. there is a terrific newsletter

at beamer 508 4rks pay off car, house or invest? pay off the car. house, let it run. you might be able to get a better return and get that mortgage money. that's no-brainer for me. let's get to our next tweet. this one comes should people save a month? this is where people can use advice. i talk about this all of the time. you should take a look at what your discretionary money should be away from just eating and that's the money that i want to see put away. all right? in other words, movies, that kind of things. i did it for two years and i cannot believe how much money i was able to save. up next, we have a tweet from at little feet farm.

to own? we are professionals. let's go to at this. locked student loans less than 3%. you are brilliant. that is what i want. take a look. those are very good. some of the higher yielding utilities are very there are excellent real estate investment trusts. those are very important. next one says at mad money at jim cramer. how much tinkering is too much? i know a bench mark of changing around. do not change 26 times a week. that makes no sense. listen, if everything you bought

only make changes when our circumstances have changed not because we want to make changes for maing changes. do you favor any particular financial adviser? i need you too find someone else who has one and recommends that person. i discovered this industry most people are too small for the big guys. i have been on fights $100,000 and don't get any treatment at all of any sort of personal touch. you have got to find someone who has a good person and use that person. i know it sounds like i'm punting but i'm not. otherwise you won't get the personal touch that is needed.

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right here on "mad money". i'm jim cramer and i'll see you breaking overnight, florence henderson, the brady bunch mom, beloved by millions, has died at the age of 82. leading americans shopping this and spending billions. president-elect donald trump spending part of his thanksgiving, looking to fet two carrier jobs in the u.s. the oil pipeline protesters are in full force. an incredible, many totally awesome rendition of the national anthem. soaring in the skies goes to a whole new level.