Physics. Foreign language classes, you can graduate from college speaking four languages. You can get a phd in early modern literature. Did you know john milton lost political pamphlets. They teach that in school if you get enough education you know the one thing they almost never teach in middle school and high school, say nothing of College Financial literacy and im not talking about economics here you can be an econ major and know nothing about personal financial planning, retirement readiness, let on how to invest your money wisely. Money is not talked about. Its almost like its a third rail of American Education youre 1,000 times more likely to read dos, an important book, good economists but not going to show you how to balance a checkbook, let alone manage a portfolio of stocks. Financial literacy the third rail and thats why im on a Constant Mission to teach you how to manage your money so you can be a better investor. I want you to make more money. Think of it as continue education for all things t financial and planning, nothing is more important than reti retirement one day youll stop, sooner rather than later. I bet most of you have some money in a 401 k plan. Corporate pensions started going away and the 401 k is the main way americans save for retirement they are offered by your employer and among the greatest Tax Investments out there along with the ira, not the irish republican paraarmy those of you about to pass out and change the channel because the idea of saving for retirement puts you to sleep, hear me out for a minute you need to know this stuff. Believe me your future selfwill thank you and while you know you may think you have everything you need, you think you know it all, the truth is there is a lot the socalled experts dont tell you. For example, conventional wisdom says you must invest in your 401 k. Many experts will advise you to max out your 401 k contributions every year if you can afford to. The maximum is 19,000 or 25,000 if youre over 50 but rises over time, a little faster than infashion in 2012 it was 13,000 it is a serious chunk of change. With these contributions coming from you pretax income, however, i think thats the wrong approach im not going to sing the praises of the plan now or tell you its the key to your financial salvation because the truth is 401 k plans can be a mixed bag. They have great features but a lot of bad ones and those plan mat ti problematic features will eat away at returns year after year with fees almost hidden from you the ones ive been involved, hidden let me layout the good, bad and ugly and ill tell you whether it makes sense to contribute more money to the 401 k or maybe a better way the good, the best thing is its a tax Deferred Investment vehicle. You pay no taxes on what you put in and never pay a penny of Capital Gains taxes on the profits within your 401 k that lets gains compound year after year tax free until you decide to start making withdrawals. Im the huge believer in the power of compound. Suppose youre 30 years old and invest 5,000 a year if you choose wisely, you should be able to generate, this could be a stretch but on average a return of 7 per year. So at that pace, over the course of the next 30 years, youll be contributing 150,000, tax free to your 401 k because that money is able to compound year after year without any Capital Gains taxes. By the time youre 60, that 5,000 a year youve been investing will be worth over 511,000 you had to pay taxes on the dividends and Capital Gains every year, that number would be lower. Perhaps as much as 11,01 110,0 lower. You only pay taxes once when you decide to withdrawal it. In sense, youll likely be retired and most of you will pay a lower rate than if youve been taxed on that money when you first earned it and thats one major reason to like 401 k plans. The other, many but not all employers will match or partially match the contributions. For every dollar, your employer might throw in 50 cents up to a cent r pois to a certain point if your employer matches it, take advantage of putting money in if your 401 k doesnt have an employer match, its a much less compelling option because 401 k plans can have a lot of problems without the match, youre much better off saving for retirement with an individual retirement account, or ira that has the same tax favor status. You can only contribute 6,000 a year or 7,000 if youre over 50 but when you change jobs, you can roll over into an ira and thats what you should do every time you switch employers or find yourself out of work. What makes it a better option . The fees when you invest in a mutual found within a 401 k yo y, you e to pay the fees. Administration hires will take as much as 2 . You know, they are actively managing your money. Have you ever looked at your statement and wonder why your 401 k holdings arent increasing in value like you thought they should be . Its the fees. They are the probable reason here is the bottom line on retirement investing if the company you work for offers an employer match for the contributions, put money into your 401 k until that match is maxed out. No reason to pass up free money and put the additional in an ira. If there is no employer match or employer match but your 401 k doesnt give you any options worth investing in, you would do much better to go straight to an ira and only start putting money in the 401 k once that ira is maxed out. Andrew in north carolina, please, andrew. Caller hey, jim, how the heck are you doing well. How are you . Caller doing good. I was hoping you can help me out. Im an early investor just a couple years out of college. I finally got some extra money in my pocket id like to invest. I was wondering do you think its more adviceble to look for a stock with a good chart or a good dividend history i can reinvest my earnings i like to have everybody be comfortable with what they do to me dividend reinvestment compounding is terrific. Charting is too tech too, lets say, i like the technicians but its too short term in nature and you got your whole life ahead of you. Lets buy stocks with good dividend that have great growth. I think thats perfect for you how about mark in florida, mark . Caller booyah, jim. Yes caller ive made a lot of money in the market as of late and when the big boys say take some off the top, what do you use as a guide for that percent that you take off . Okay, for my travel trust, i find that its not such a bad idea up 25 to pull off a little, up 50 to pull off a little and up 100 take off the houses money and let the rest ride its been my rule and worked for me for more than 40 years. Bobby in new york, bobby caller yes, how are you . Well, okay. Caller i have some money put aside. Im retired. Much but whatever little money i have, i want to invest it but i dont want to have it jeopardized. I cant afford to lose it. Right i got to tell you, what you want to be able to do then is be in stocks that have good yields i have a book called stay mad for life where i tell you very simply how to walk through and see if the yield is safe but thats what i would do i mean, the typical stocks that ive been recommending over the last 40 years would be Something Like the Telephone Companies but the major Telephone Companies and the utilities, the major utilities. I think those are made for your investing. All right. When it comes to retirement, if your company matches contributions to a 401 k, max out. If you dont get an employer match, straight to an ira, much lower fees on mad money tonight, you just got your diploma dont miss my investing advise for recent College Grads too busy see investing in stocks all of you put your money to the next best thing and many roads to a healthy retirement. Lets chart your course. Stick with cramer. Announcer dont miss a second of mad money. Follow jimcramer on twitter havea 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. From the couldnt be prouders to the wait did we just winners. Everyone uses their phone differently. Thats why Xfinity Mobile lets you design your own data. Now you can share it between lines. Mix with unlimited, and switch it up at anytime so you only pay for what you need. Its a different kind of Wireless Network designed to save you money. Save up to 400 a year on your wireless bill. Plus get 250 back when you buy a new samsung note. Click, call or visit a store today. If everyone in this country lost their minds and decided to turn america into cramerica, with me as your king or grand you Better Believe id make serious changes. What would the 18th premiere of jim cramer look like for those of you who didnt get that reference, i think google could be your friend because this is a show about money then lets stick to the more main stream elements of the regime for starters, it drives me nuts we dont teach our young people how to handle their money. Would it be so crazy if you had to take a class on personal finance before you graduate from high school . I think it should be mandatory like the Awkward Health care classes where they show you how to put a trojan on a banana. Sadly, im nobodys dictator even though i was a guest judge on the apprentice, i have no say but i control what we talk about on this show can i take a moment to speak words we believe and rarely say in play conversation money is important its really important. And caring about the state of your finances does not make you a super officifish official mon. Say you want to get married and you have a horrible credit score. Neither you or your partner will qualify for a loan to buy a car or loan or perhaps get a darn credit card. These things matter in life. Look, i know they say money cant buy happiness but i found that cliche to be dubious at best because being broke as i know living my car is a major buzz kill. Yeah, firsthand. I spent time six months in my 78 ford when i lived in california i sure wish i had an expert to guide me through the money stuff way back when although i still put money away for retirement. I took it out of my homeowners budget what should young people do with their money . First, foremost and always, you need to invest thats the only way youre going to be able to cheat Financial Freedom and i mean living a life where youre not totally dep dependent an yoon you paycheck everything too many people start saving and investing too late making their lives a lot more difficult than they need to be but i also know many young people feel like they have all the time in the world and many more start investing before they aretruly ready in fact, Better Things for them to do with their money, they think they have but they dont they need to invest. Invest young invest young invest young thats why i have three lessons for all those who are recently out of college lets start with the caveat. Before you can start investing, you have to pay off Credit Card Debt this is something i mentioned before but for young people because banks got aggressive about offering credit to College Students now matter how much money you rack up in the stock market, if you have a balance on credit cards, it will eat up your profits. The interest will be greater than the profits you can make in the stock market pay your darn credit card balance in full every month. Automate it with your Credit Card Company if youre worried about tempting not to. When i got out of law school, i had max debt on half a dozen credit cards and i took a jobbed a Goldman Sachs and made good money but not enough to pay the interest and be able to afford the biggest boom box in the world, which was my first and only priority. I paid down the debt pronto and got my dream box three months later and now youre talking the point is Credit Card Debt is ownerous if youre hitting it out of the park with you paycheck they win you lose now, lets get to my three lessons for young investors. First, this advice is for everyone out there regardless of age or educational level but especially fresh College Grads you need to save money i recognize that not everyone has a predisposition to save i also acknowledge that telling you to save over and over again wont necessarily do any good. However, the stock market is a great way to trick yourself into saving a part of your paycheck that you might otherwise spend investing in stocks can be a lot of fun whereas leaving money in a savings account or cd feels joyless for most, not to mention the returns are so small they are meaningless. Second lesson, this is a much more targeted piece of advice for you. While youre still young, you can afford to take a lot more risk than an old fogie like myself when youre in your 20s, you can get away with riskier strategies like owning more speculative single digit stocks where the potential upside is huge and so is the potential downside or playing with options and just generally being more aggressive with your money. Why is that . Its not because young people are naturally better speculators. Its simply because when you make money and you make a money mistake in your 20s, well, that mistake, you got the whole rest of your life to fix it you could afford to buy more highrisk stocks that lose money when youre young because you have 49 years to earn the money back im jealous of you older investors, caution you need to be more cautious the more into retirement, more bonds, more high yielding stocks and speculative stocks but if youre in your 20s, you should invest like a young person, not an old person. Forget about bonds, please, im begging you. There is no reason for someone in their 20s to have Bond Exposure when that money could be invested in stocks where it will most likely end up consistently making you a higher return year after year after year and yes, stocks is an index. If youre watching, does he like index funds . Yes. Young people, take this advice to heart as i suspect the recent College Grads most likely to invest in the market are the ones most responsible and prudent about the money and its great when youre putting together a budget to live within your means or decide how much of your paycheck to save every month. For young investors, being too prudent is reckless. 20 somethings live a little, at least in your stock portfolio. Take some risk forget about bonds and for the next decade, play around with some more speculative names. Maybe some tiny Biotech Companies with a lot of potential. They blow up and go to zero frankly, you have the whole rest of your life to earn the money back and you cant save until you pay off your Student Loans, please, have you looked how low those Interest Rates are on the Student Loans versus Credit Card Debt i chose to invest my money and after paying Credit Card Debt, i still invested sure, pay some of it off but you dont need to hurry. Id rather have you invest now and pay later. Final lesson, its never too early to start investing for retirement use your 401 k if your employer matches your contributions and especially put money into a roth which is ideal for young investors. Ill explain later here is the bottom line. For young people out of college, investing is a great way to trick yourself into saving money you might otherwise spend. Beyond that, remember, when youre young, you can afford to make a lot of mistakes and take a lot more risk and its never too soon to start contributing to your 401 k or ira especially if that ira is a roth stick with cramer. Im off to college. Im worried about my parents retirement. Dont worry. Voya helps them to and through retirement. Dealing with todays expenses. While helping plan, invest and protect for the future. So theyll be okay . I think theyll be fine. Voya. Helping you to and through retirement. Doprevagen is the number oneild mempharmacistrecommendeding . Memory support brand. You can find it in the vitamin aisle in stores everywhere. Prevagen. Healthier brain. Better life. We live in a world where you have more choices where to invest your money than ever before more choice isnt always better. Sometimes having more options makes it impossible to decide which are right and which are dead wrong and youve never had more options Picking Exchange traded funds and mutual funds than you do right now they are everywhere. At this point there are so many different kinds of etfs it can make your head spin. By the way, i hate the way many sectorbased efts like the banks or Home Builders have been warping the way the stock market trades itself. Thats something if you dont understand, you can read about in get rich carefully. Many are flavor of the month etf designed to cash in on something in the headlines, full you, frankly. Silly fang, the jobs that wasnt cannabis and get rich quick as far as im concerned but only for the people who created them, not for you. But the important thing is this, you have all sorts of etfs out there and they can all advertise. They can they are great at that companies that run these funds want your money and one of your biggest mistakes you can make is to give it to them with a few significant exceptions unfortunately, this is also one of the most common money mistakes out there in fact, most people in this country simply equate investing with putting their money in mutual funds some 80 Million People are basically half the households in america have exposure to mutual funds. Many of you dont have a choice. A lot of 401 k plans dont let you pick individual stocks i cant pick individual stocks but it wouldnt matter because the plan i was involved wouldnt let you. They give you many mutual funds to choose from which is a major reason it equals an individual retirement account is the better way to invest for you for retirement im restrictive. I cant own stock. Mad money is predicated on experience if you have the time and inclination, i believe you can beat the s p 500 i know because ive seen it done so many times in the past four decades by so many people. People i know. What exactly is so bad why am i rallying against them if youre investing in them, youre most likely lets say youre getting hosed why . Actively manage mutual funds, mutual funds where there are people deciding which to buy or sell unlike edge funds, managers dont get paid for delivery or performance and collect fees from investors people like you and the amount of money they make depends on the size of assets under management, which means the biggest incentive is not necessarily to do well, something good performance can help with. What they are being paid to do is fund raise and thats part of the reason why in study after study, year after year its been shown the vast majority of actively managed mutual funds under perform the benchmark. A big reason why in other words, if you invest in actively managed fund for large cap u. S. Stocks, its performance will maybe most likely fall short of the s p 500. To make matters worse, despite consistently under forming, actively managed funds have some of the highest fees in the business thats some industry the Hedge Fund Business is much more sink or swim. At my fund we compound 24 annually versus 8 for the s p over the same period yet i fret every second about fees and chose not to take them during years i was up a couple percent versus a stronger performance. I was embarrassed. You can read all about it in confessions of a street addict. Here is the part i say not all actively mutual funds, actively managed mutual funds are bad some have fabulous records, okay some have fabulous managers that consistently deliver terrific results but here there is a major problem. When a fund delivers major results for a period of time and the position, the descent person will stop accepting new investments. So a lot of highquality funds are out there but dont take now money because when your fund gets too big, its incredibly difficult and if the manager is not a so great people, they take more and more money until performance suffers. When the late, great john bogle, the father of the index fund asked me how i could beat the averages so consistently, i said i limited my investors and made it like a club where you had to be nominated to get in that meant i was never overwhelmed with new money something that often leads to bad Investment Decisions he said if everyone did that they could have better records, too, and maybe that was the secret sauce i know jack bogle thought it was. Thats why as a general rule if you go to invest in mutual funds, you dont want to be in an actively managed one. The fees are too high and the evidence is the bulk is too staggering they will inflict Capital Gains taxes where you control when to pay these for the taxes if you own your own stocks and invisible stocks, you dont have to sell and pay. If you dont have time to run your portfolio, own a cheap, low Cost Index Fund that mirrors the s p 500. This may sound like a real simple solution but dont over think it 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 of stocks. Thats why its insane when people start owning multiple mutual funds by its very nature, a fund should be diversified. There are a lot of sector based out there but no r have any exposure to those. Im saying it. If you take the time to play individual sectors, that time should be better spent picking individual stocks. For etfs, in most cases they are for trading, not investing many rebalance every day and can take a real toll on longterm performance. There are exceptions here like the gld, i like as a simple way to play gold and i like the etfs that mimic the 500 if youre not a pro, you should be careful about foolingaround with most of this stuff, the double and triple. Those are a nightmare. Dont do them. Here is the bottom line, at the end of the day i think a cheap s p 500 index fund is the really least bad way to passively manage your money and better than the vast bulk of funds. The good, the bad and the ugly and if you have time to do your homework and the inclination factor, i believe you can beat the performance by picking stocks yourself. If you dont have the time, though, dont over think it. Just one cheap s p 500 index fund is the best way to go lets go to chris in florida, please, chris . Caller hey, jim. Quick question, im 35 and have my 401 k diversified what suggestion do you have to helptirement i want to keep things simple dont have a lot of funds. Make sure you have the right amount of cash for a decline and make sure you get a lot of income because you need that because youre its going to compound over time but remember, youre diversified if you own a diversified fund dont think you need to be diversified by owning three or four diversified funds ive seen that too often not so mutual love here. Picking stocks is the best way to manage your money but if you dont have time or the inclination, i urge you to go with a cheap s p 500 over most actively managed funds remember, i did not diss mutual funds if they have low fees if they are s p 500 mimics. Much more mad money ahead including the best path to healthy retirement depending on income dont forget the kids, 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 tweets without the 140 character restriction. They let them go longer so stick with cramer. You should be mad they gave this guy a promotion. You should be mad at forced camaraderie. And you should be mad at tech that makes things worse. But youre not mad, because you have e trade, whos tech makes life easier by automatically adding technical patterns on charts and helping you understand what they mean. Dont get mad. Get e trades simplified technical analysis. No matter how good you are at stock picking, if you dont know the rules about whatkou acy in or get the best bang for your buck with lifetime expenses, you could be missing out on terrific gains or losing a fortune to hidden fees. I admit this stuff isnt as fun as picking stocks. I love picking stocks more but over the course of your lifetime, it could help build up were wealth. The simple truth is i dont want you leaving that money on the table because nobody could be bothered to explain say the finer points of retirement investing. With that in mind, let me explain whether it makes sense for you to use a regular 401 k or ira or for you to go with a roth, which is a term im sure you heard countless times. I know ive talked endlessly about the benefits of using an ira and a 401 k plan to invest for retirement i dont want to beat a dead horse but this is a subject i get a ton of questions about should i put my money in a roth or regular one lets start with the ira if you make less than 137,000 a year i think that aside from the earned income tax credit, the roth ira may be the single greatest thing our government has done for lower income families since the end of the war on poverty which it best ended in a draw, poverty possibly winning on points if i were king of the forest, id make the limits for the iar investing the same as the ones for the 401 k. Its ridiculous that they arent but the industry doesnt seem to care because they make a lot more money off 401 k plans there is no other reason i could find for why you cant contribute three times as much money to a 401 k as an ira honestly, ive searched. It doesnt make sense. Its got to be the industry. No one talks about it. I told you about how a regular ira lets you take pretax income and invest and gains can compound year after year decade after decade tax free until you decide to start withdrawing money once youve retired. But a roth ira works differently. With the roth you make contributions using after tax income unlike a regular ira, putting money into a roth wont decrease your tax bill, not up front. On the other hand, once your money is in a roth ira, youll never pay tax again. You dont pay Capital Gains, dividend tax and when you withdraw it after the age of 59 and thats half, you dont pay any income tax you pay taxes now so that you dont have to pay any income taxes 30 or 40 years from now when youre retired. There is one more positive point. After five years you can withdraw the money you invested, not gains but the amount you contributed and wont get hit with a 10 penalty which is what happens before you hit the magic age of 59. 5. Thats different from a regular ira where you dont pay any taxes on your contributions now and your gains dont get taxed within the account but once you start withdrawing money, every penny you take out is taxed as ordinary income. Which means that when youre trying to decide between a roth ira or a 401 k and a regular ira or 401 k, you need to determine whether it makes more sense to pay income tax now with a roth or to wait and pay income tax once you retire with a regular account. In short, youre trying to figure out whether youll be in a higher tax bracket after you retire or lower one. Its a complicated question, has a lot of specifics with your situation, thats why i always tell people look, on these questions, i think you got to speak to advisors. You got to know yourself its important its more than simply how old you are but my quick rule of thumb, for anyone whose tax rate is 25 of less which is most of america, ill go with the roth better take the hit up front than allow it to compound tax free for the rest of your life for those of you who dont have the time to pick your own diversified portfolio, five to ten stocks of mad money. Of course beyond the index fund, the smartest thing to do is just park your retirement money in a lowCost Index Fund that mirrors the s p 500. Until you actually retire, i still think stocks should make up the majority of your retirement investments people live longer i never said this before but ill keep repeating it until they take me off the air so necessary its not what people say i want you in stocks longer and longer how about this roth 401 k . This works like a roth ira meaning you make contributions with after tax income and never pay taxes on that money again except because as a 401 k plan, its a much higher contribution limit. Like i mentioned for 2019, you can put 19,000 into a 401 k and thats true for a roth there is one other big difference, though, unlike a roth ira, a roth 401 k doesnt have any means testing no matter how much money you earn, you can take advantage of a roth 401 k as long as your employer gives you the option it depends what the future will look like. If you believe taxes are headed much higher over the course of your lifetime because many people do, than roth 401 k where you pay taxes now and pay nothing in the future is the way to go even if youre 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 including by the way your professionals the bottom line, the lower your present income, the lower your tax rate a roth 401 k or ira lets you palo ratpa pay low rates now. So the less money you make the more likely a roth is for you. Yes, its that simple. And when youre 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 for yourself right now stick with cramer. Did you know that americans that bought gold in 2005 quadrupled their money by 2012 . And even now many experts predict the next gold rush is just beginning. So dont wait another day. Physical coins are easy to buy and sell and one of the best ways to protect your life savings from the next financial meltdown. [narrator] today, the u. S. Money reserve announces the Immediate Release of u. S. 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Gold is now on sale at prices unseen in years and this year could be one of the greatest goldbuying opportunities of all time call now while vault inventory remains. As one of the largest u. S. Gold coin distributors in the country, the u. S. Money reserve has proudly served hundreds of thousands of clients worldwide. Dont wait another minute, call now to purchase your American Eagle coins at cost for the amazing price on your screen. Lately weve heard a lot about the crushing burden of Student Loans. Tens of millionsn in student den an incredibly high figure up 50 from a few years ago i dont d idea for the government to cancel all that debt like some democrats have proposed stinks to gradua realize it might take decades to pay back these loans study kidst graduate with no debt are worth more money than their classmates without standing student loan balances but as i said before, student debt is a heck of a lot cheaper than Credit Card Debt. Dont sweat the program too much the problem here is simply there is so darn much of it and you cant get rid of it even in bankruptcy im a big believer in social mobility im coming out here and teaching you how to use the stock market, the greatest engine of wealth created to help you make serious money. For any of you parents or thinking of becoming parents, let me tell you right now there are very few things you can do for your kids future that are better than paying for as much as their College Education as you can afford we know that College Graduates have a much easier time getting good jobs. We know they ultimately make more money than nongraduates, a fact of life if i were making a style high ark arkey of financial needs, id tell you its more im tomporta save and invest for retirement, which is why i talked about that earlier in the show. Those of you that are parents, maybe youre wondering how to prioritize your retirement and making sure your kids have the best possible future if you reach retirement age and dont have enough money to pay for your needs, who will support you . Your kids. You dont want to be a burden on them so take care of yourselves first. The books say it i studied it i agree. After you saved enough retirement, its time to start thinking about college even if your kid is a toddler and the best way to save hands down is through whats known as a 529 pl plan they vary by state some states let you use a 529 to hedge against tuition inflation. You can buy College Tuition credits at todays prices and use them in the future thats not what im talking about, especially not in a world are National Politicians are talking about making tuition free use a 529 savings plan these are run by the states but generally speaking, it doesnt let you manage your own portfolio. You have to pick between a mix of different mutual funds like many 401 k plans thats not my favorite way to do things i prefer you to have control but 529s have so much going for them, i want to swallow this flaw you can only choose between funds, go for a lowcost fund that mirrors the market. What are the rules for 529 plan . Lets say you had your first child. Congratulatio congratulations. If you can afford it start one with your kid at beneficiary maybe wait a couple days, you just had a baby. I traded big blocks of alcoa throughout the birthing, not my finest hour but the trades worked out financially if not familiar youre paying for this after tax income and once youre money is in the 529 plan, you dont pay taxes on the gains so they compound tax free year after year its like a roth because of federal gift tax laws, you can contribute 15,000 a year if youre single, 30,000 if youre married and file taxes jointly. Thats a lot of money. By the way, your childrens grandparents can contribute to the same plan and if you dont have the money, a grandparent can start a 529 with your kid as a beneficiary but for financial reasons, better to have a parent do it. 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, you can front load five years worth of contributions without incurring the gift tax as long as you dont write plans to the beneficia beneficiary. A single parent or grandparent could invest 75,000 into a 529 from the start or if youre married and filing jointly, you contribute 150,000. For the next five years after that, you wont be able to contribute anything without being hit by the gift tax. Once you drop that money, you wont need to make too many more contributions. The key here, though, is that you want to get that money into your kids 529 as early as possible thats because the greatness of the plans is about the power of compounding. Given that you dont pay taxes within the 529, if you can somehow contribute 25,000 off the bat and invest that money in a lowCost Index Fund, the rule of thumb over time youll make an average of roughly 7 per year i know the stock market is a lot more volatile than that but just as a thought experiment, if stocks generally perform like they have historically, you could double your investment in about nine years if you start saving now when your kid is born, by the time he or she is a teen, the value will have doubled and doubled again if you started with 75,000, after 18 years, borrowing some kind of catastrophe, you could have 300,000. Thats enough for a fancy expensive private College Education and a descent chunk of law school but if they dont hold back the price of tuition, it wont cover the four years. But you got to start somewhere most people cant front load a 529 like this with the expense that comes with raising a child but worth keeping in mind that front loading as much as possible is indeed the best strategy for grandparents, this may sound grim but your 529 plan contributions wont count towards your estate tax. Hit a borrow line from the life of brian and look at the bright side of death. Last thing about saving for college and grad school, any money in a 529 plan that you dont use, you can transfer to another relative were talking siblings, parents, First Cousins and if you save this money and your ungrateful kid decides no the to go to college. You can withdraw from the 529 plan but youll have to pay taxes on any of your gains with a 10 penalty. Here is the bottom line. No paying for your kids College Education isnt as important at least financially as providing for yourself from retirement if you have children, after youve made enough money, enough retirement contributions for the year, after you made the contributions, putting money in a 529 College Savings plan should be the next item on your agenda the best way to protect your kids from the crushing burden of Student Loan Debt. Stay with cramer you know, i love hearing from you cramerica so lets take some tweets. Lets kick it off with scott when talking diversification, you said to pick like five stocks in different sectors. Do you recommend the same regarding mutual funds or suggestion everything into one fund this is for growth based retirement ira everything into one fund never diversify among mutual funds. Thats the industry talking. Next up we have a tweet fr from bren, madtweets, cramer. I put my first 10 k, 10,000 in an s p 500 but do you continue to add money to it or leave it as is . Thank you, booyah. You got the first 10,000 in. After that you start splitting i usually like a radio of a fifth. Onefifth in an individual stock and the rest, you know, fourfifths in the Mutual Fund Im a huge believer. We have another tweet from r n from ryfrom rya from ryan, ten weeks old, mad money. What can i say thats exactly who should be getting the 529 you look at that look at that hand some chap. 529 plan right now. Right now. All right. Following tweet is from jay. Not jlo cramer, better protect a mad money portfolio with bond based etfs, gld of course. By the way, just so we know, i like gold, too, but you cant put it in your backyard. Put it in a safety deposit box thats a must. Dont keep it at home. Now, it seems like i got a little advice from bonddecco. Has someone told him short sleeve shirts exist. Short sleeve shirts and pocket protectors, not my style my mother didnt like them she thought i looked bad in them moving on, we have, hello, jim, will we ever see stock blitz again small money investors can afford the stocks in triple digits cnbc. What will take for that to happen okay, this is really important point. The Big Companies have been schooled by both hedge funds and mutual funds that they dont want to pay so much per share. Okay in other words lets say they have they want to buy 10,000 shares of something. If they split it, they will be buying 20,000 but the same Commission Per 20 as ten its costing them more to buy 20,000 shares after commission than it does ten so why split . Why not just keep it the same . Thats what the institutions have taught them i try to Tell Companies thats wrong. Youre not going to have the right base of shareholders you should split the stock weve had no luck whatsoever why . The ceos are only listening to the big institutions, not to you and not to cramerica, not to people watching mad money. Ill continue to do so but im losing this fight. Jerry on twitter, hey, cramer, love what you do want to start reading your books. Is there an order in which i should read them i have to tell you, i read them backwards and would read get rich carefully. That tells you how to be involved slowly and by the way, stay mad for life. Stick with cramer. I like to say there is always a bull market somewhere and i promise to try to find it just for you right here on mad money. Im jim cramer see you next time. Welcome to the shark tank, where entrepreneurs seeking an investment will face these sharks. If they hear a great idea, theyll invest their own money or fight each other for a deal. This is shark tank. Im brandon. Im steven. And im bruno. And were the owners of sand cloud. We love the beach, and we used to go to the beach all the time right after work. One of these days, we woke up on the beach super uncomfortable and looked at each other and had this idea of putting a pillow inside a beach towel. And thats when we first came up with our milliondollar idea the pillow towel. We created the product and tried selling it on the beach, and thats when we realized it was a total fail