Transcripts For CNBC Mad Money 20150908

Probably and a host of history classes. You can graduate from college speaking three languages and having a deep understanding of quantum physics but you know the one thing they never teach you in high school let alone never touch with a ten foot pole in College Financial lit asy. You can be an econ major and never learn how to balance a darned checkbook. Money is just not talked about in the education. Its like the third rail of the whole educational system. And thats why im on a Constant Mission to teach you every Aspect Imaging your money so youll becoming a better investor when it comes to retirement investing and your discretionary mad money portfolio. Which is a big reason i wrote get rich carefully to begin with. Most even if you dont own any individual tostocks directl you have a 401 k plan and thats why i want to talk about retirement. 401 k plans are the main way that americans save. Theyre among the great tax Deferred Investment vehicles out there along with the ira, not the irish republican army. But the individual retirement account. For those of you about to fall asleep or change the channel because the whole idea of saving for retirement puts you to sleep hear me out. Because you need to know this stuff. Ill tell you some things you wont hear from the so called experts. This show is different. At this point, its pretty much become conventional wisdom you have to invest in your 401 k that only an idiot would not. Some tell you to max it out, the maximum contribution is going up over time from 17,500 but either way thats a serious chunk of change. They come from your pretax income. However, im not one of those people who thinks you should max out of your 401 k . Im not someone who is going to sing the praises of the 401 k and tell you its the key to financial salvation because 401 k plans can be a real mixed bag. Boo with a couple of great features and a lot of bad ones too. The bad futures will eat away at your returns, sometimes through fees that are almost totally hidden from you that actually are quite upsetting to me. So let me lay out the good, the bad, and the ugly. Maybe put that cash in a better place, better use. First the good, the best thing about a 401 k its a tax Deferred Investment vehicle. You pay no taxes on what you put in and then you never pay a penny of Capital Gains profits which allows your money to compound, decade after decade. Totally tax free until you make withdraws. Regular viewers of this show and readers of my books know im a huge believer in the power of compounding. Suppose youre 30 years and you start to invest 5,000 a year and remember youre not paying any income tax on that. If you choose your investments wisely you should generate as much as a 7 return on average. Over 30 years youll be contributing 150,000 to your 401 k plan but because that compounds year after year without any Capital Gains taxes by the time youre 60, that pretax income well, that could be worth over 511,000. If you had to pay, thats on dividends and had to pay taxes on dividends it would be a lot lower. Thats how important compounding is. And avoiding the well, the tax deferred nature of the thing. You only ever have to pay taxes once. Thats when you decide to withdraw it. At that point, the taxes are ordinary income and youll be likely retired by then, youll be paying a lower rate than when you first earned it. So thats one major reason to like 401 k plans. The second, many but not all employers will match or partially match your 401 k contributions. In other words, for every thatter you invest for every dollar you invest, your employer may match. Never walk away from free money and especially when its untaxed. If you dont get free money from your employers i think its a much less compelling option. There are a lot of things about 401 k plans that can be really bad. Which is if you dont get a match from your employer i believe its better idea to save via the individual retirement account or ira which has the same tax favored status, you can only contribute 5,500 to your account, but when you change accounts you can roll it over to the ira and thats what you should do every time. Switching employers or finding yourself out of work. Why do i think the ira is better . First of all, 401 k lets you pick individual stocks but many more give you a 401 k plan with limited options. Sometimes you only get to choose between a dozen maybe a couple dozen mutual funds. So for those of you who cant pick your own stocks in your 401 k plan, before you contribute money to your 401 k plan, make sure it gives you an option to invest in something. You want a nice low expense index fund that mimics the s p 500. However, if your 401 k doesnt offer that shame on your company, go with a selfdirected ira. So you can have control over your money. One more negative. Within a 401 k when you invest in the mutual fund you have to pay that mutual funds fees. This is really important. But your 401 k administrator the company the people your employ year hires to run the plans they will also charge fees. Boo meaning that all of the money 401 k saves on taxes it can be clawed back by the fees. If you ever looked at your statement and wondered why your 401 k holdings arent increasing in value like they should be, fees are probably the reason. So where does all this leave us . Heres my bottom line. The company you work for offers an employer match, then you want to put money into your 401 k until that is matched up. Dont pass up on free money. Put any additional retirement saves into the ira. But if thats no employer match or if thats an employer match, but theres no options worth investing in, you would do better to skip the 401 k and go straight to the ira immediately. Deborah in california, deborah . Caller hi, jim. Thanks for taking my call. Quite welcome. Caller i have a twopart question regarding the value of listening to a companys earnings conference call. Okay. Caller the first part is, how can we decide what we want to do in other words what action we want to take based on the Earnings Report since the stock will behave in a contradictory to the report. They can guide lower on the revenue and earnings going forward. And the stock will go up. The second you might think that it should go down, right . The second part of my question is, im on the west coast. So the calls frequently are at 7 00 and 8 00 a. M. Eastern time so for me, the value of listening to the call is diminished because im not going to get up at 4 00 or 5 00 a. M. To listen to it. So i wont take any action on this. Well, heres the solution. You can listen at your leisure, im not trying to get anybody into a quarter to buy a stock ahead of a quarter if i can avoid it. What you want to do is take a longer term view in the comfort of you your home, without any noise, go listen to the call or read it, go to yahoo finance, get some of the research, match the expectations with what was said. Take a longer term view. Thats the advantage of the long term investor, you dont have to play that day. Doug in nevada. Doug . Caller booyah, mr. K. Okay. Caller yeah, my question is, i have 401, fairly substantial. Would it advisable for me to change that to a selfdirected ira . Okay, well, what matters is the match. If the employer is matching, no. You want to get the match you want to get the max match so to speak. And then after that, yes. Or but if its six or half and one half dozen of the other, the funds arent that good youre allowed to be in your 401 k then choose the selfdirected ira. Let me help you take control of your financial future. If your company matches your contribution in the 401 k , max that out. But if you dont get an employer match, you dont have investable options, go straight to the ira. You got your diploma, dont miss my advice for the vent grads. Too busy to invest in stocks, thats okay. Lets chart your course. Why dont you stick with cramer. Announcer dont miss a second of mad money. Follow jimcramer on twitter. Have a question . Tweet cramer, madtweets. Send jim an email to madmoney cnbc. Com or give us a call at 1800743cnbc. Miss something . Head to madmoney. Cnbc. Com. At ally bank no branches equals great rates. Its a fact. Kind of like mute buttons equal danger. That sound good . Not being on this phone call sounds good. Its not muted. Was that you jason . It was geoffrey it was jason. If everyone in this country went insane and decided to turn american into cramerica with me as your king, you better id be making some changes and changes pronto. Because this is about money ill stick to the finance shald elements. It drives me nuts we dont teach young people about money. Would it be crazy to take a class in personal finance before you graduate from high school . Like the Awkward Health classes that can get graphic at times. Now, sadly im nobodys dictator, i dont have any influence over the educational policy, but i do control what we attack about on the show. Can i speak some words that we all believe but very rarely get to say in conversation . Look, money is important. Its really important. And caring about the state of your finances does not make you some kind of superficial bourgeois monster. Lets say you have a lousy credit score and you want to get married, congratulations. You inflicted your horrible credit on the new spouse. Now you wont be able to buy a car or get a darn credit card, these things matter in life. They say money cant buy happiness, but i have found that conventional wisdom to be dubious at best, since being broke is indeed a major buzz kill as i know firsthand from the time i spent living in my 1978 ford fairmont. I sure wish i had an expert to guide me through this stuff way back then. Let me answer one of the most important questions out there, what the heck should young people do with their money . First and foremost and always, you need to invest. Thats the only way youll be able to achieve financial freedom. By freedom what i mean is living a life where youre not totally 100 dependent on your paycheck. Im always thrilled when i see members of the younger demographic who are taking an active hand in managing their open money. Some people start investing and saving way too late. But i also know many young people feel like they have all the time in the world, and there are Better Things for them to do stuff with their money so we have to drill down on this. Thats why ill give you three lesson and a caveat for those vent vently recently out of college. You need to pay off your Credit Card Debt. It is true for younger people, since Credit Card Companies have gotten really aggressive about offering credit to college students. No matter how much money you rack up in the stock market it will eat into your returns. Long term the interest is greater than the profits you can make. So pay your darn credit card balance in full every month. Automate it with your Credit Card Company if youre worri youll be tempted not to. I cant defeat that Credit Card Debt no matter how many great stock ideas. Now the three lessons. This is really for all of the young people who graduated and regardless of age and education level. You need to save money. But not everyone has an inherent predisposition to save. We cant be natural cheap skates. Just telling you to save over and over again wont do any good. However, the stock market is a great way to trick yourself into investing in stocks and that can be a lot of fun. We try that on the show. We try to do some entertainment within the teaching. Whereas leaving money in a savings account or a certificate of deposit feels kind of joyless for a lot of people. Not to mention that the returns are meaningless. Plus innio invest in the market, it will be a lot easier to resist the temptation to spend on things you dont need. Because it will be sitting in stocks that you like,. You have to sell your money to get the stocks back. Not only is this a terrific way to trick yourself into saving but also it has the added advantage of being the smartest place to put your money right now. Yes, traditional saving vehicles like money market fund, wow, you see the rates i check them every week. Cds, its waste to keep your savings in them when your cash can be making you more money by owning stocks in a brokerage account. Get your hands dirty with the money. This is a much more targeted piece of advice. While youre still young you can afford to take a lot more risk than say an old foe by like middle east. You can get away with riskier and stressful strategies and the potential upside can be huge or the potential downside. Play with options and being a lot more aggressive with your money. Why is that . Its not because young people are naturally better speculators, not at all. Its simply because when you make a mistake in your 20s with your money, you have your whole rest of your life to fix it. You can afford to buy more high risk stocks and end up losing your money when youre young because you have 40 odd years to earn back your losses so you have to take the risks. Older investors youve got to be more cautious. The closer you get to retirement the more conservative you have to be. More bonds and high yielding stocks, fewer trading in the single digits. If youre in your 20s you should invest like a young person, not an old person. Forget about bonds. Theres no reason for someone the in their 20s to have Bond Exposure when it can be invested in stocks when you can get a higher return year after year. I want you to take this advice to heart, because i suspect that the recent College Grads most likely to invest in the market are the ones who are the most responsible, the most prudent about the money. And prudence is great when putting together a budget to live with, within your means. Or deciding how much of your paycheck to save every month. Being too prudent is actually being reckless. 20 somethings, live a little. Take some risks. Play around with some speculative names. Maybe some tiny biotech companies, even with a lot of potential. Even if they blow up on you and go all the way to zero, you have your whole live to make that money back. Final lesson its never too early to start investing for retirement. Use your 401 k if your job has one and put the money in the roth ira. Heres the bottom line for young people out of college, investing is a great way to trick yourself into saving money. You might spend that money. Beyond that, remember when youre young, you can afford to take a lot more risk in your portfolio and never too soon to start contributing to your 401 k or ira. Especially if that ira is a roth. Lets go to mike in tennessee. Mike. Caller hey, jim. How you doing . I love your show. Thank you. Caller we watch it all the time. Thank you. Caller my question is, a few episodes ago you said you do not like buying a stock if the peg ratio is above 2. I wonder if you use that as a sell signal and if you do, how long do you let it go before you pull the trigger and sell the stock . When its more than two times the growth rate, i do get nervous. Now, there are some stocks that dont trade on earnings and you have to be careful. Like a bunch of cold stocks but the typical stock, you know, lower than two times that rate of growth, im fine with i. But it is a regular flag once it gets higher. A penny saved is a penny earned. Never too soon to contribute to your ira or 401 k . I have more on the pros and cons of index funds. Which way do i come out . And then income is a big factor, im going to point you in the right direction up. Plus, i wouldnt wish student debt on my worst enemy. Ill tell you how you can protect yourself and your family. Stick with cramer. I asked my dentist if an electric toothbrush was going to clean better than a manual. He said sure. But dont get just any one. Get one inspired by dentists. With a round brush head. Go pro with oralb. Oralbs rounded brush head cups your teeth to break up plaque, and rotates to sweep it away. And oralb delivers a clinically proven superior clean vs. Sonicare diamond clean. My mouth feels super clean. Oralb. Know youre getting a superior clean. Im never going back to a manual brush. We live in a world where you have more choices about where to invest your money than ever before. A virtual infinity of etfs, mutual fund, you name it. But more choice isnt always better. Sometimes having more options just makes it impossible to decide which ones are right and which are wrong for you. You never had more options when it comes to picking mutual funds like right now. Theyre everywhere. At this point there are so many different kinds of etfs it can make your head spin. I hate the way the way the sector based etfs the ones that allow you to buy and sell whole groups like banks and Home Builders i hate the way they warp the way that the stock market is trading. You can find out more in get rich carefully and if youre in them i have to urge you to find out about them. You have all kinds of etfs and mutual funds out there and they can advertise. They want your money. One of the biggest mistakes you can make as an individual investor is to give it to them. With the few significant exceptions. Unfortunately this is also one of the most common money mistakes out. There in fact, most people in the country equate investing with putting money in mutual funds. Some 80 Million People have exposure to mutual funds. Many of you dont have a choice. At will of 401 k plans dont let you pick individual stocks. They give you a menu of mutual funds to choose from, which is one major reason an individual retirement account or ira is a better way to invest for retirement for you. What exactly is so bad about most mutual funds . Why am i railing against something thats an institution in this country . Simple. If youre investing in mutual funds youre likely well to put it delicately, youre getting hosed. I dont want to paint with too broad of a brush here. There are worthwhile mutual funds and ill tell you how to find them in a minute. But first, you need to understand the problem with the mutual fund model. My main beef here is that with actively managed mutual fund, mutual funds where there are people deciding which stock or other securities to buy and sell we have some problems. Unlike hedge funds, Mutual Fund Managers dont get paid for delivering performance. They collect fees from their investor, people like you. And the amount of money they make depends entirely on the size of the assets under management. Aum we call it. The biggest incentive is not to do well, something that good performance can help with. But what theyre really being paid to do is bring in more money for more investors. Salespeople for the funds. Thats part of the reason why in study after study year over year its been shown that active live managed mutual funds underperform their benchmark like the s p 500. If you invest in large capitalization u. S. Stocks then the performance will fall short of the s p 500. Make matters worse, even though actively managed funds consistently underperform the market, they have some of the highest fees in the business. How do you like that . They dont do as well as the benchmark and they charge more. Boo so even if your fund does manage to beat the benchmarks the odds are good that any outperformance could be eaton up by big Management Fee and youll have an underperforming one that mirrors the s p 500. Of course, there are some with fabulous managers who consistently deliver consistent results. But the trouble is when a mutual fund delivers such Great Results for so long, if the manager is a decent person theyll stop accepting new investments. Put their foot down. Because at a certain point when a fund gets too big, it becomes incredibly difficult to beat the market. So as a general rule if youre going to invest in mutual funds, you dont want it in an actively managed one. The fees are too high and the bulk of them underperform is too staggering to keep going that way. The best strategy is to manage your own portfolio of stocks but for those of you who dont have the time to Research Individual companies or if your 401 k plan wont let you own them, let me tell you the smart way to invest in mutual funds. You want, you can write this down. A cheap low Cost Index Fund that mirrors the market as a whole. One that mimics the s p 500. They have ultra low fees wand the index fund you have a vehicle that will let you participate in the strength of the stock market without having to spending the time to pick the individual stocks. The whole point of putting your money in the fund is to save you time and effort to pick your own stocks. Thats why its insane that people start to own multiple mutual funds. A fund should be diversified. I know there are sector based mutual funds and etfs out there, but no reason for home gamers like you to have any exposure to them. If youre going to take the time to play the individual sectors that time would be much better spent picking individual stocks. As for etfs these vehicles are for trading, not investing so i dont like them. Many etfs rebalance every day and that can take a toll on any kind of long term performance. But there are some exception, the gld that i like to play for gold. If youre in a pro, and youre not managing a portfolio or day trading every day, you shouldnt be fooling around with the etfs either. Heres the bottom line. I think the cheap s p 500 fund is a good way to manage your money. Versus the mutual funds. But the index fund owns everything, the good, the bad and the ugly. And if you do have the time i think you can beat the performance of the index fund by picking stocks yourself. Which is the entire reason i do this show every night. If you dont have time though, then dont overthink it. Just one cheap S P Index Fund is the best way to go. Mary in maryland, mary . Caller booyah, jim. Jim, i started listening to you a while back. Then i started buying stocks on your advice. Thank you. Caller now im looking at my portfolio here and jim, jim, mine eyes have seen the glory. So i want to get a little fancier and perhaps buy some china stocks. However, im curious about adrs and possible exposure to Foreign Currency Exchange rates. So can you educate us on adrs and Exchange Rate exposure. Yeah. We have the battle hymn of the republican going on overseas but if you want to own individual stocks and the businesses are good i dont care where they are. I dont care about the currency, the business is that great, the stock will go higher. But understand that if youre buying an adr and its a European Company and the money is being devalued, you wont do well. Im fine with it, but if theyre trying to debase their currency you have to stay in the good old usa. Matthew in new york. Matthew . Caller booyah, jim. Booyah back at you. Caller hey, yeah, im 23 years old, recent college grad and new to the workforce and i just started to max out my ira. Realizing time is on my side i want to kind of go for an aggressive allocation or growth and take on risk but im unsure how to do that exactly. So i wanted to get your suggestions for someone starting out through the retirement investing, how would you do well, i think you want to have the fastest young Growth Stocks and those are they tend to be found in Technology Sector but also of course in biotech. Dont go too crazy. I want one or two stocks not making money, but no more than that. A lot of them are too small to talk about. One of those two, these are fine. You can do those because you have the rest of your life to make it back. Sorry, not so much mutual love here. Picking stocks still the best way to manage your money but if you dont have time, please please please go with the cheap s p 500 fund over most actively managed funds. Much more mad money ahead, including how you can find a best path to retirement. Protecting your children from Student Loan Debt will put them in a better position to build their future. Ill help you plan for the hefty tuition bill and plus im responding to your tweets without the 140 character restrictions that so hems me in. Stick with cramer. At t and directv are now one. Which means you can watch movies while youre on the move. Sitcoms, while you sit on those. And even fargo, in fargo binge, while you lose weight and enjoy a good cliffhanger while you hang from a. Why am i yelling . The revolution will not only be televised. The revolution will be mobilized. Introducing the all in one plan. Only from directv and at t. Let me tell you about whether it makes sense for you to use a regular 401 k or an ira or for you to go with the roth which is a term im sure you have heard countless teams but may not understand. I know i have talked about the benefits of using an individual Retirement Plan or ira for short or 401 k for retirement. This is a subject i get a ton of questions about. Should i put my money in the roth account or a regular one . Start with the roth ira, aside from the earned income tax credit, the roth ira is the greatest thing for the war on poverty. Poverty won on points but i told you about regular ira allows you to invest and then you compound, totally tax free until you decide to withdraw that money when you retire. A roth ira works differently. With the roth, you make contributions with aftertax income. So in other words, unlike a regular ira putting money into the ira wont decrease your tax bill. On the other hand, once your money is in the roth ira youll never pay taxes on its again. As long as your cash remains in the account, you dont pay Capital Gains tax and when you withdraw it which you can do after age 59 1 2, you dont pay income tax on your withdraws. In other words with the roth you pay taxes now so you dont have to pay any taxes income tax 30 or 40 years from now when you retire. Theres one more positive point about a roth. You can withdraw the money, not the gains just the amount you have contributed and you wont get hit with a 10 penalty which is what happens when you withdraw from the regular ira before you hit 59 1 2. Thats different from a regular ira where you dont pay any taxes or contributions now. And your gains dont get taxed within the account but once you start withdrawing the money, every penny you take out is taxed as ordinary income. A very high rate which means when youre trying to decide between the roth ira and the regular ira or the 401 k youre deciding if it makes sense to pay income tax with the roth or wait and pay once youve retired with the regular account. Noermds in other words you have to figure out if youre in the higher tax bracket after you retire or a lower one. It has to do with the specifics of your situation, your career. Simply how old you are. For anyone whose marginal tax rate is 29 or less, take a roth. Allow it to compound tax free. For those of you who dont have the time to pick the diversified portfolio, park it in a low Cost Index Fund that mirrors the s p 500. As you get older add some bonds. Stocks should make up the majority of your investments. I know i said this before and ill repeat it until they take me off the air because its necessary and contrary to conventional wisdom. I want stocks and not bonds until later. How about a roth 401 k . This works like a roth ira, meaning you make contributions with aftertax income and then pay taxes except its a 401 k plan it has a much higher contribution limit than an ira. The government says that the 401 k contribution limit for 2015 is 18,000. And theres one other big difference unlike a roth ira a roth 401 k doesnt have income cap. No matter how much you everyone, you can take advantage of one of these as long as your employer decides to give you the option. Of course all of this depends on what you think the future is going to look like. If you that the taxes are headed higher over the course of your lifetime, then a roth 401 k where you pay taxes now and nothing in the future, thats so the way to go even if youre making a lot of money in the present. I think that belief is mistaken. For those of you who young people who only become politically conscious under the obama administration, it may seem like theres no way to stop the tide of higher taxes but history says different. I believe we can close the deficit without raising taxes, about as political as ill get on the show. At the end of the day though, this is beyond our control and therefore beyond our ability to predict. The bottom line lower your present income, lower your taxes. Pay the low rates now and never worry about taxes again for your retirement money. The less you make the more likely it is that a roth is likely for you. When saving for retirement, dont worry about what could go catastrophically wrong 30 or 40 years in the future. Just worry about making the best choices right now. Mad money is back after the break. Cramer, you are super. You are awesome. Im a first time investor. Thank you for inspiring me to get into the game. Your show is the best. I want you to know you have transformed me. Thank you, cramer. I have been reading stories about the crushing burden of Student Loan Debt. Right now, more than a trillion dollars is owed. An incredibly high figure. s not that it real its not that it really stinks to graduate and then realize it might take decades to pay back the loans. In study after study, those who graduate with no debt end up being worth a lot more money than your classmates have outstanding student loans. Im a big believer in social mobility which is why i teach you how to use the stock market because its the greatest engine of wealth ever created and i want you to use it to make some serious money. For anyone of you who are parents or are thinking of becoming parents, let me just tell you right now that there are very few things you can do for your children that are better than paying for as much of their College Education as you can afford. We know that College Graduates have a much easier time getting jobs. Especially in our current environment where unemployment is still way too high. We also know that they ultimately make more money. Of course if i if i were to make an about maslow hierarchy, its more important to save and invest for retirement. For those of you as re parents how can your own retirement be important by making sure your childs education is important . Who is going to support you, your kids. Take care of yourselves first. However, after you have saved enough for retirement in a given year then its time to start thinking about college. Even if your kid is only a toddler. Heck, i mean if your kid is a glean in your eye so to speak. The best way to save for College Hands down is through whats known as a write this down, 529 plan. Now, these plans do vary by state. But the general rules are true all across the country. There are two kinds of 529 plans. First some states let you use the 529 as way to hedge against tuition inflation by buying at todays inflation versus the future. I want you to use the 529 savings plan. These are run by the states and the rules differ, but a 529 doesnt let you manage your own portfolio. You have to pick between a mix of mutual funds like many 401 k plans. This is really not my favorite way to do things. I prefer you to have control of your assets, and picking what actual instruments. But 529s have so much going for them, that im going to swallow the one flaw. Go for a low cost fund that mirrors the market, like the s p 500 or the vanguard total market fund. Which is you will see in many of the 529 plans. It literally owns all the stocks traded on the new york stock exchange. And so what are the rules for this 529 plan . Lets say you had your first child, congratulations. [ applause ] if you can afford it, you should start a 529 right then and right there. Well, maybe wait a couple of days. Anybody knows i traded big blocks of alcoa throughout the birthing not one of the finest moments. Heres how it works. Contribution are not tax deductible. Theyre not. So youre paying for this out of after tax income but heres the good part. Once its in there you dont pay taxes on the gains. So let them compound year after year. Its like a roth ira. Because of the federal gift tax laws you can only contribute 14,000 a year if youre single. 28,000 if youre married. You file your taxes jointly. Thats a heck of a lot of money if you think about it and your grandparents can contribute too. If you dont have the money, a grand parent can start a 529 with your kid as a beneficiary. Its better to have a parent to do it though. Lets say you and your parents are sitting on a huge sum of money, one of the cool things about the 529 plan you can front load without incurring the federal gift tax as long as you dont write any checks to the plans beneficiary over the next five years. In other words, a single parent or grand parent can invest 70,000 into it right from the start or if youre married and filing joint you can contribute 140,000. For the next five years you cant contribute anything without getting hit by the gift tax which is what you dont want. But honestly, you wont need to make too many more contributions. The key here is you want to get that money into the kids 529 as early as possible. Thats because the greatest of the plans is about compounding. Remember, you dont play taxes in the 529. If you can contribute 75 thousand dollars off the bat, the rule of thumb is that over time, youll make an average of roughly 8 per year. I know the stock market is more volatile than that, but just as a thought experiment, if stocks perform, you can double the investment in nine years. If you start saving right when your kid is born, by the time he or she is 18 the value of your 529 plan will have doubledou a doubled again. After 18 years barring a catastrophe you could have as much as 285,000 thats enough for a fancy private College Education and law school to boot. I know many cant front load it but worth keeping it in mind that front loading is the best strategy. For grandparents this may sound kind of grim, but your 529 plan contributions wont count towards your estate tax. Last thing about saving for college and grad school, any money in the 529 plan you dont use you can transfer to another relative. We are talking sibling, parents, even first cousins. If you save all of this money and your kid decides not to go to college, you can withdraw the money from the 529 plan but you have to pay taxes of on the gains along with a 10 penalty. Know paying your kids College Education isnt as important as providing for yourself in retirement, but if you have children then after you have made enough retirement contributions for the year, putting money in a 529 College Savings plan should be the next item on the agenda. Its the best way to protect your kids from the crushing burden of Student Loan Debt. Mad money is back after the break. Peptocopter when cold cuts give your belly thunder, pink relief is the first responder, so you can be a business boy wonder fix stomach trouble fast with pepto. Without the internet i would probably be like a c student. Internet essentials from comcast has brought lowcost high Speed Internet into the homes of hundreds of thousands of lowincome families. It lets students do homework and study at home. So far more than two Million People across america have benefitted. Internet essentials is going to transform the lives of families. I see myself as maybe an entrepreneur. Internet essentials from comcast. Helping to bridge the digital divide. Holy cow, we have to get some of your tweets you have been sending me jimcramer, including ones that are very nice and smart. All right, here we go. Kenneth Feagin 23 tweets, i love you, jim. I love you, kenny feagin 23. How is that . Its requited in my book. All right. Some people call me jack tatum. No. Im a sweet guy. jw green wants to know the following. Why care about short term hit if you have long Term Investment strategy . Amen. How many times have i said i like x, y, z stock it goes down that day and they want to burn me in effigy or in scalding oil. Think a little longer term, particularly when you get a tax break. Here we have dii who wants to know, aside from your own, what other books should Home Investors have under their belts to trade and manage better . One up on the wall street and, peter lynch, one of them on wall street and beat the street. Look at david darsts book. I use those to learn a great and he taught me a lot at Goldman Sachs and moved on. But david darsts books are very good. Up next dr. Hoy 480 tweets, did you ever sleep or did one of your biotechs provide you with clones to exist . No, i dont sleep. Now we have answered that question. Now give me a heads up, btw which i think stands for by the way, im now following your know what you own motto or ky kwyo. Cleaned out my portfolio this week. Yomo. You only live once, so i totally agree with you. Heres crabo 44. He wants me to know im in the market because of you. Sir, just give all the haters a big booyah. Keep teaching us what they want to grow. Let me give you a heads up. I love the haters. I wouldnt be doing this if it werent for them. I would have gotten out years ago. Im a spiteful driven guy to the haters. And everyone in my personal life knows that. So haters, youre why im in this game. Congratulations and stick with cramer i asked my dentist if an electric toothbrush was going to clean better than a manual. He said sure. But dont get just any one. Get one inspired by dentists. With a round brush head. Go pro with oralb. Oralbs rounded brush head cups your teeth to break up plaque, and rotates to sweep it away. And oralb delivers a clinically proven superior clean vs. Sonicare diamond clean. My mouth feels super clean. Oralb. Know youre getting a superior clean. Im never going back to a manual brush. I like to say theres always a bull market somewhere and i promise to find it for you, right here on mad money. Im jim cramer. I will see you next time. Male narratotonight on the west texas investors club. Its a utility patented caddy that has the world of applications. Could be a good product. We need to figure out where the market is for this thing. Aj. Aj. Let me show you a robocup. You see the dust on your products . So now my store is dirty . I think so. The problem is you and your personality. You should look in the mirror. Im not asking you for money. My company is called hyte. It allows a user to book a private airplane from anywhere. Rooster and i have got a little surprise for him today. I have a tenmonthold son. Well, he wont remember youre gone. Theyre little. Oh, please dont say that, man. Narratodeep in the heart of texas, two men carved a fortune from a harsh and unforgiving land Butch Gilliam and rooster mcconaughey