Increasingly difficult to become rich if you werent born that way and, love it or hate it, i believe the stock market is the best ladder we have in this country for social mobility. There are million upon millions of people in this country but there simply arent that many jobs that pay you a salary fat enough to actually make you rich. Even if youre a total cheapskate and save nearly every single penny you earn. If you want to become really wealthy in this country. Unless youre born with a spoon in your mouth, that means planning your Financial Strategy for an entire lifetime. Even if you dont have a super highpaying job, as long as you can save a decent chunk of your paycheck and invest it wisely year after year, you can make your wealth grow to the point where you become if not filthy rich at least financially independent, meaning you dont need to worry about your job security or where your next paycheck is going to come from and youll be able to retire easily without the need to rely on Social Security which, for all we know, might not be around for some of our younger viewers hitting retirement age. Thats why tonight, tonight i want to help you figure out the best way to manage your money in order to help achieve real financial independence. But in order do that, we need to talk about the concept of generational investing because the kind of strategies that make sense when youre young and in your 20s are very different from the sort of things you should be doing when youre middle aged or a Senior Citizen for that matter and we dont talk enough about that on mad money. Tonight is different. But theres one consummate when it comes to managing your finances no matter how old you are and thats the fact that you will never get a better opportunity to make your money work for you than by investing in the stock market. Even when we here in a bear market, when the action is treacherous and volatile and it feels like stocks go down every single day, when you lake a longterm view its ease is toy see the stock market is by far the most effective method of Wealth Creation out there. Sure it might go down for weeks, for months, it might go down for years, it might crash as it does upon occasion, but if you take the very long view, stocks tend to go higher and i dont say that as a pollyanna, when i got started in the business in the early 1980s, the Dow Jones Industrial average was trading in the 800s despite multiple bear markets between then and now, the dow stands for what you might call well above that mark. Thats a fan tast i can amount of Wealth Creation. And thats why im so adamant, no matter how old you are, no matter how wealthy you are you should have some of your money stocked away in this, in the stock market. And for those of you who are concerned that the market is rigged, dangerous, too unreliable . If you go back to 1928 before the stock market crash that preceded the great depression, through the end of 2014, the average annual return for the s p 500 including dividends is about 10 . Show me an asset class with a better asset return. You cant do it. Stocks just arent the best game in town, theyre the only game in town, for some of you who would rather get rich quick, that 10 average annual return for the s p 500, i know it may not seem like such an impressive number. Some are probably saying thanks for nothing. Wait a second, youre wrong. Youre just wrong. Forget the fact that its more than double what you can expect from a 30year treasury or theyre earning next to nothing. Lets examine that 10 figure in absolute terms. When youre taking a longterm vi view, you know i prefer those funds, it starts to seem pretty darn impressive. Sure the market will have its up years and down years but overall, long enough time frame that 10 figure, including dividends, has held steady. But to really understand the value of an asset class that tends to give you a 10 return the average year, you need to view this number through the lens of whats known as compound interest. Sometimes ill talk about this as the magic of compounding. Think of it like this if you invest 100 in the s p 500 and it gains 10 in the first year, then youve got 110. After another year of 10 gains, youve got 121. A third year of the same gives you 133. The gains keep getting larger and larger because each year youre making additional money off the previous years profits. Eventually the 10 average return youll double your money in roughly seven years. Now for those of you who are really young, right out of college, waiting seven years to double your money i know, seems like an eternity. And, listen, ive got more risky ways of growing your capital faster if you stay tuned. However, the truth is that as you get older, an investment that can pretty consistently take your money up in seven years time and double it, it just becomes incredible. That said, the magical compounding works best the younger you are because that means you have more time for your money to grow. Yet sadly young people are the least likely to be impressed by that kind of steady Capital Appreciation. Thats why acclaimed economist George Bernard shaw said youth is wasted on the young. So let me do my best to make these numbers sound more impressive. Were going to walk you through it. Suppose youre 22 years old and youre just entering the work force. Youve got more than 40 years before youre expected to retire. So lets say you invest 10,000 in an s p 500 index fund right now. And lets also suppose that the next 40 years arent too different from the last 40 years. In that case, if the average person from the s p 500 holds steady at 10 , in four decades your 10,000 investment will turn out to be worth more than 450,000. Thats enough to sent multiple children through college, grad school, buy a house in nice parts of the country, pay for a huge chunk of a ritzy retirement. And that monster multiyear gain didnt require any kind of stock picking. It doesnt require you to trade or time the market or even do any sort of research into individual companies which i know is hard for most of you. You just need to invest your money in a lowcost s p 500 index fund or etf and then you wait. Granted youre waiting 40 years but 450,000 when youre approaching the age many people retire seems more valuable than the 10,000 investment you made when you were young and had your entire work life ahead of you to make money the regular way. So please, im begging you. Think of it like this, a little money saved and passively invested in the stock market is the easiest way possible when youre young to turn into a massive fortune when youre old. And have all sorts of additional cost responsibilities and all you have to do after you initially save that money is let it sit on the sidelines. Ideally in a 401 k plan or ira so you dont have to pay Capital Gains or dividend taxes. The same logic applies if youre 30 or 40 or even 50. But you get more bang for your buck if you start younger which brings me to the bottom line. Even if you dont have time to do home work, the stock market is still the best tool out there for growing your wealth and thanks to the magic of compounding if earlier in your life you start investing in the market the bigger your long term Capital Gains can be. And of course its not just Capital Gains but also dividends. Everything gets reinvested. Lets go to brenton in new mexico. Brenton . Caller jim cramer, big booyah from the land of enchantment, how are you, sir . I am good, how about you . Caller im doing fine, thank you. General question, mutual funds and index funds claim minimizing single stock risk. But inherently isnt it fair to say that mutual funds and index funds have other risk that you would a void with a single stock portfolio. Absolutely. And i think thats why i always suggest there be two portfolios. There should be that capital preservation and appreciation fund. That is going to be we put that aside for retirement and that should be in a diversified fund. Preferred to be an index fund and the rest should be mad money. A sliver of it. Mad money we pick individual stocks. Thats why we tall show mad money. I dont want the bulk of your portfolio in individual stocks. Theres too much singlestock risk but i want you to pick stocks and i know wyou want to o it or you wouldnt watch the show, brian in oklahoma. Caller thanks for having me. First time investor. How do you value a company one Company Versus another, the measure of the value . Well, we spend a time of time in get rich carefully talking about that. What youre really trying to do is measure the future earnings streak and if you can measure the future earnings stream, you can figure out what you pay for that earnings stream now and what really matters is if you take a longer term view you can get a feel for what that stock might be able to give you for dividends and Capital Gains. Dividends tend to be for capital preservation and Capital Gains is for the appreciation stream. I want you to have a little bit of both but you have to be thinking about what a company can american the future. Thats what dictates stock prices. This show is about helping you build and preserve your wealth and the stock market is the best tool throughout to do that. A lot more mad money ahead. Including the fourletter word of the investing world. What it is and why the conventional wisdom about it is all wrong. Plus, im not pulling punches here, what you absolutely must not be doing in your retirement account. And im unveiling the rules you need to navigate in a bear market so stay with cramer have a question, tweet cramer, madtweets. Send jim an email to madmoney cnbc. Com. Or give us a call at 800743cnbc. Miss something, head to madmoney. Cnbc. Com. Billions are spent to confuse and, dare i say it, flummox the american public. Save 16 on Car Insurance. Switch now. Well at compare. Com, we say enoughs enough. So we constantly scrutinize millions of rates. Answering the question once and for all, who has the lowest. Just go to compare. Com and get up to 50 free quotes. Choose the lowest, and hit purchase. So you can get back to whatever it is you civilians do when youre not thinking about Car Insurance. Compare. Com tonight were talking generational investing. Meaning how to handle your finances depending on whether youre old or young or somewhere in between. As much as many of us might not want to admit it, the rules in this game can be different depending on what age you are. Nobody would suggest a retiree pour all of his or her money into highrisk speculative stocks that could either have enormous upside potential or go all the way to zero and absolutely wreck your portfolio. But just because some of this may sound straightforward doesnt necessarily mean its obvious or standard, which is why im taking the time to go over the really important differences depending on where you are in your life cycle. I always tell you you need to have too discrete policy cashes, your retirement portfolio in a 401 k or i. R. A. , then your discretionary mad money portfolio, hence where the name comes from, where you can start taking a few more risks with your money once youve topped out your Retirement Fund. No matter how old you are, retirement objectives must always come first. I love to play with the discretionary mad money side of things, thats what this show is about. But the truth is a bet on your retirement is a bet on your own longevity. You want to live for a long time and you should havent to work your fingers to the bone. That means planning for retirement from the moment you get your first paycheck. Regular viewers here know my rules. No matter who you are, the first 10,000 you invest in the markets you go straight into a low Cost Index Fund or etf that mirrors the s p 500. Index funds are fabulous ways to get exposure to the stock markets gains without putting in the kind of time or effort thats necessary. And if you dont have the time or inclination to pick individual stocks then it can all come from the index fund that mirrors the s p 500. Im fine with that. Theres no reason this needs to be complicated but like i mentioned its very important you get yourself some exposure to the market because no other asset class can grow your wealth the way equities do. Once you save more than 10000, that means you have enough money to start a diversified portfolio of five stocks. Remember, anything less than five stocks in five distinct sectors you arent really diversified. Take the money and invest it in individual companies for your retirement portfolio. Its only once you save a large enough amount of money for retirement, once youve maxed out on the benefits of your i. R. A. And 401 k plan that we Start Talking about that discretionary portfolio, where you can take more risks. I want to make this point because people feel all i want you to be is in individual stocks. Thats just wrong. Index funds and then individual stocks. When youre younger your retirement portfolio might not look that different. Younger investors can afford to take risks with our money that we old guys simply cant. Thats true for a host of reasons. When youre still in your 20s or even your 30s if you invest in something risky and it crosses your portfolio, youve still got a lot of time to make the money back. Youve lost your whole working life, basically, you have to whole rest, years and years and years of paychecks. Is however if youre approaching retirement and you lose a fortune in the stock market, thats a problem and youll have very little time to fix it which brings me to my first rule of generational invest iing not on can younger people afford to take risks with their money that older folks cant, but those of you in the younger demographic, its imperative you take those risks. You should devote some part of your discretionary mad money portfolio to betting on these highrisk long shots. I know im out there saying this stuff but i believe in this. Im talking about smaller less well known companies with massive upside potential couples with down side risk if things go wrong. Remember, this is for the younger cohort. The classic examples are the Development Stage biotech stocks which can fly through the roof if you get a big drug approval or a piece of positive data on a drug years away from hitting the market. By the same token, the smaller biotech cans get slammed. They dont have any kind of dividend protection or earnings protection. However were talking about longterm investing here. Looking for good opportunities that can work regardless of whether were in a bull of bear market and there are plenty of Speculative Companies that have nothing to do with the drug business. Why do i insist younger investors speculate . Take risks that might scare otherer people . Because the gains here can be absolutely stunning. And it would be down right foolish to pass up the opportunity to pick the winners. In your 20s and 30s you should be investing like a young person, not a an old man, that means take risk. Let me give you an example. When mad money came on the air back in 2005, our first ceo interview wiiew was with a man s with regenron. It stuck around for 17 years without developing anything noteworthy. Since then, this company has become a powerhouse with the stock taking off into the stratosphere. Based on the strength of a drug that has a blockbuster Macular Degeneration formula and continuing to roar to a number of other therapies that their pipeline regenerated. Fast forward to 2015 and region ron stock traded up 592 before getting slammed by a market wide selloff. But for the sake of using round numbers, lets call it 5000. Ten years ago you could have bought regenron, speculation, five bucks. What would happen with that 500 . How about this . A gain of roughly 9,900 . Not a double, not a triple. Not a quadruple. Regenron is a tenbagger but you couldnt have gotten in on that gain if you hadnt taken a risk in 2005 and bought a company with no profits and only the promises of a ceo that things would work out. Regenron worked out in a major way but many small cap biotechs have done long and lost you money over a short period of time. You wont always identify who the winners in this space but thats okay as long as you cast a wide net and speculate, taking small positions in ten of these speculative bio techs, nine of them are going to zero. As long as the tenth was one regenron, you still would have made a monster gain. There should only be one small part of your diversified mad money portfolio but it belong there because the risk reward of trying to find speculative winners makes sense when youre young. For older investors, though, speculation is much more risky and i recommend playing it with excess cash that you absolutely can afford to lose. Heres the bottom line, remember to speculate while youre still young enough to take the hit if something goes wrong, as long as youre disciplined and it only makes a small part of your discretionary portfolio, not your retirement portfolio. Its absolutely worth hunting for the next regenron without hesitation. Much more mad money ahead. I have the answer to the question on top of investors minds. Stocks or bonds . The ageold wisdom youve heard is wrong and im about to rewrite the script. Plus the game plan you need to follow in the bear market and its the most important piece of advivice about financial help i could give you. Many of you will have to take action tomorrow. Dont miss this. Stick with cramer. Its time to address a major issue that i have to admit i dont spend enough time discussing here on mad money. Im talking about the question of stocks versus bonds. Now, theres good reason why you dont hear me recommending you invest in bonds very often and its not just because this show is about stocks. The fact is, ever since the Great RecessionInterest Rates have been held down to incredibly low levels and therefore bond yields like the return you get from owning, say, u. S. Treasuries have been absolutely paltry. Both by historical standards and versus what would be safe dividendpaying stocks. In general for the last two years even when the stock market has been getting absolutely pounded bonds stilly havent represented very good values versus equities, thats why ive so often castigated you about the idea that excessive prudence can be the most reckless strategy of all. Because if you invest too much of your money in safe virtually riskfree u. S. Treasury bonds youve basically been ening sure youll get a very low return on your investment for many years to come. All in all, if you want to grow your capital and after all, thats what investing is supposed to be about then like ive said before, stocks are still really the only game in town even after, what can i say, so many years. However, i dont want to make it sound like im poohpoohing bonds all together. Theres absolutely a place for bonds in your portfolio. Its an essential place. Especially as you get older. Heres the crux of the issue, though. Even though i believe stocks are the best way for you to grow your capital long term, at the end of the day, stock investing and bond investing are about two entirely different things. Stocks are the tool you use for Capital Appreciation meaning turn your money into more monday. But bonds are about capital preservation, they protect your money and give you a nice and steady albeit small return thats still big enough to offset the impact of i nation. You invest in stocks so you can risk the wealth you have to generate even greater wealth. Thats what it is. You invest in bonds to protect whatever part of your wealth you cant afford to lose. There it is. Which brings know the generational investing aspect of this question. Depending on how old you are theres a huge difference of how you should approach the idea of putting your money into bonds. When youre young, investing is about taking risks so you can get better returns. Ive already explained how people in their 20s and 30s can get away with that attitude. You have to rest of your working life to make back any potential losses. But as you get older and have more and more wealth you simply cant afford to lose it, especially in your retirement account. Bonds are a staple of saving for retirement because u. S. Treasuries are the closest thing to a riskfree investment out there. Most experts will tell you you need to own more bonds earlier in your lifetime than i think is truly necessary. You never get rich owning treasuries. Even if you invest in 30year u. S. Treasuries, our governments longest dated bonds with the higher yield dont produce much in the way of Capital Appreciation. Lets say for the sake of this example that treasury bonds, say theyre yielding 3. 5 , relatively low level for historical standards, thats higher than the 2. 5 to 3. 25 range we saw in the first nine months of 2015. With that 3. 5 yield, as long as you reinvest your coupon payments back you might double your money in 20 years. Remember the average historical return for the s p 500, the benchmark for u. S. Stocks is 10 annually which lets you double your money in a little more than seven years. So if youre under the age of 35 and you own a bunch of bonds with the idea that theyll slowly but steadily make you money, i think youre being too cautious. I know that puts me out there but you know what . Ive been around. Thats how i feel. Even in your 401 k , your i. R. A. , you want to be heavily weighted towards stocks while youre young. Typically because these tax Advantage Vehicles allow you to avoid paying dividend taxes, allowing your gains to compound year after year after year. But as you get older, owning treasuries, especially Retirement Funds, becomes essential. Unlike the stock market where you can lose money in the blink of an eye, bonds are safe. Once youve used the stock market to make yourself inspect you want to funnel more must be into u. S. Treasuries where you know your investment wont vanish overnight. Ideally you do that by putting your cash in the cheap bond fund that mirrors the yield you get from longterm treasuries. Lets get down to brass tax. How much of your retirement portfolio should you keep in bonds versus stocks . That depends on how old you are. Im going to give you my rule of thumb, though, i dont think your Retirement Fund should have any Bond Exposure whatsoever until you turn 30. If you own bonds at the age of 25, youre wasting your youth. Its better to put your capital to work in the stock market where it can grow. In your 30s im going to let you keep 10 of your Retirement Fund in bonds or 20 if youre on the conservative side once you here in your 40s you can go up to 20 to 30 bond. In your 50s 30, to 40 and in your 6s as you approach retirement age, all right, take it up to 40 and 50 . Thats right, 40 and 50 bonds. If youre retired i still think you should keep a chunk of your portfolio in the stock market. Postretirement my recommendation is increase your Bond Exposure 60 to 70 . Once you stop working you cant afford to take too many losses with your investments especially since youre going to need to spend the money in your retirement account. But that said, i still think keeping roughly a third of your money in stocks makes sense because youre going to be living off your investments for the rest of your life so some part of your portfolio should be trying to create more wealth in case you live longer than you expect and need more money to support yourself. In other words, going all in on bonds once youve retired is a bet against your own longevity. Who the heck wants to take that kind of bet . Heres the bottom line . For younger investors, putting money in bonds is a fools game. As you get older you should increase your retirement bonds exposure to the point where 40 of your money is in u. S. Treasuries by the time youre in your 60s because that part of wealth will be protected against the volatility of the stock market. Ferch you retire you should keep owning some stocks so that some a piece of capital can appreciation over the long term. Best case, you live a very long time and that exare tra money comes in handy. Lets take questions. How about nasir in pennsylvania. Caller booyah, jim. How are you . Caller good. Big fan of my show, and i love your book get rich carefully. Thank you. Caller im looking for advice on how to determine a stock if im going to start a core position given how important cost basis averaging is. I think this is a great question and the reason why is a lot of people feel like they want to draw a line in the sand, they want to make what i call a statement buy or be in a position where they got rid of it. They bought it and put it away. I say take into account human frailty. The most i like to buy is half of my position, i prefer to buy a quarter. If the stock goes higher, what a terrible high quality problem. If it goes lower you have room to buy, i like to buy in stages, in my books i talk about stage buying because i dont want to be overconfident. Dont be overconfident. Brian in new york, brian. Caller hey, jim, how are you . Caller im fine, how are you . Caller i have a 401 k from a previous employer and im trying to decide whether to put in the an annuity accounts managed by an Insurance Company or just a traditional i. R. A. I want you to run it yourself. You watch the show, i think you can do it yourself. The annuities have fees. Im not against anything that makes it so people can build wealth but my experience has been a lot of annuities have fees that eat things up. Maybe theres some that dont but i believe in selfdirected investing when it comes to that and if you have to you can put in the the next fund with if you dent have time. I like to take control of my investment, an i. R. A. Lets you do that. Investing in stocks and investing in bonds are two very different things. As you get older you can add exposure to bonds but young investors . You just dont belong in bonds. So much more mad money ahead, including the play book for when a bear market takes the bite of your money. Plus im not kidding around, if you want to ensure strong retirement, listen to my advice and takes action tomorrow morning. Dont miss it. And im answering the questions youve been sending me on twitter so why dont you stay with cramer in a world held back by compromise, businesses need the agility to do one thing another. Only at t has the network, people, and partners to help companies be. Local global. Open secure. Because no one knows like at t. This clean was like pow. Everything well . It felt like i had just gone to the dentist. My teeth are glowing. They are so white. 6x cleaning , 6x whiteninga in the certain spots that i get very sensitive. I really notice a difference. And at two weeks superior sensitivity relief to sensodyne i actually really like the two steps step 1 cleans and relieves sensitivity, step 2 whitens. Its the whole package. No ones done this. Crest healthy, beautiful smiles for life. To want, rather than focusing on the day to davies s day vicissitudes of the stock market, i want you to talks about taking a longer time than we usually take on discussing money. Im talking about a 20, 30, 40, 50yearold deal. Theres no such thing as a stock you can buy and hold for the next decade or two. Doesnt work like that. I wish it were that easy, its not. Regular viewers know my mantra is buy and home work, not buy and hold. No matter how confident you are in a company, check up on it on a regular basis, make sure nothing is gone wrong. However because you cant pick a few stocks that doesnt mean its impossible to take a longterm view. You need to zoom out a bit and when you start examining stocks over a multidecade time horizon, one thing becomes readily apparent, if you know what youre doing, a bear market can simply be a different kind of opportunity. Thats right, when stocks are getting slammed, getting hit everywhere you look when it seems like losses will be endless, when shares of individual companies cant mount significant rallies in the face of positive news definition of a bear market you have to recognize you could be getting a terrific opportunity to pick up high quality stocks for the long run into the weeds. Now im not giving you a license to buy stocks indiscriminately but im saying when youre facing with a bear market, meaning when the average is down by more than 10 , lets use that as the parlance on the show, from their highs and it seems like they could go lower it probably makes more sense to buy most stocks, as long as youre willing to take short term pain for long term gain. Whenever you buy during a bear market you need to be careful. Never buy a position at once, thats pure arrogance. Youre looking like a moron if that stock goes lower. Instead, buy small chunks of your position incrementally on the way down, humility please in a bear market you want to use wider scales meaning after you make a purchase wait for the stock to go down meaningfully and substantially before you buy more. Youll probably find youve taken advantage of a terrific opportunity most people were too afraid to pounce on but i need you to think longer term. Something we didnt do at the beginning of the show. You dont believe me . Just look at this chart of the s p 500 over the 10 years starting in the fall of 2005. Look at those hideous declines during the financial crisis in 2009. If you use that to very gradually build position, then within a couple years you made a kipping. How about that nasty bear of 2011. We snapped back from those losses more rapidly. This is why Warren Buffett seems so sanguine when the market is getting crushed. He has a long time horizon and enough money he can afford to take any level of shortterm pain in order to get his hands on longterm gain. Dont get me wrong. If you have a shorter time horizon for example, if youre a Hedge Fund Manager who needs to be up for the year or the day, investors will flee your business then you cannot afford to approach a bear market as a longterm buying opportunity. If Hedge Fund Managers keep buying, youll lose enough money and a short enough period of time that the fund will likely go under. Read confessions of a street act the vast majority of you are not running he understand funds. You dont need to make money everyday or month or year. You need a Long Term Strategy that lets you rake in massive multiyear gains over the rest of your lifetime so you have enough money to retire comfortably, send your kids to college this is not an excuse to hang on to loser stocks of loser companies simply because you hope one day theyll turn around my point is the ugliest most vicious markets that send everything down, the good with the bad, they dont always create opportunities for small investors, as long as youre patient enough to take advantage of them slowly because if you pounce too quickly, youll end up buying too close to the top. The other caveat, if youre not playing with an s p 500 index fund, you have to be careful about what stocks you pick during a bear market. You need do the home work, make sure you own the stocks with companies that are doing well, good Balance Sheets or at least companies doing okay but could do better in a stronger environment. During a bear market, you must absolutely not buy the stocks that are right in the blast radius of whatever is causing the decline. Take the banks in 2008 and 2009, oil and Natural Gas Resources that started going down in literally the fall of 2014. You dont want to own the companies causing the weakness, instead you should search for Collateral Damage stocks that are going down because everything is being taken lower by the s p 500 futures and and if you own anything in the blast zone, dont hesitate to sell and swap into something thats safer. One more very important point, if you want to take advantage of a monster decline to do buying, you need to have some cash on the sidelines in order to make your move. Otherwise youll just be shuffling money between different stocks, all of which are going lower, thats why im adamant that you have some cash in your portfolio and the better market is doing the bigger your cash position should be. The better bigger. That way when things inevitably go wrong, you can use the weakness for the stocks you like at Bargain Basement prices. When you approach the stock market with a longterm time horizon, you have to remember the big bear market decline cans actually turn out to be excellent buying opportunities, as weve cbs since we started the show as long as you only purchase highquality merchandise in small increments on the way down. Stick with cramer. Every year, the amount of data your enterprise uses goes up. Smart devices are up. Cloud is up. Analytics is up. Seems like everything is up except your budget. Introducing comcast Business Enterprise solutions. With a different kind of network that delivers the bandwidth you need without the high cost. 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All night ive been telling you about the best way to approach investing from a long life long generational perspective. How to manage your money when youre young, when youre middle aged and when you havent you heard 60 is the new 50 . Even once you retire. But theres another aspect that i have to stress here and thats the need to get your kids interested in managing their own money more generally and learning about the stock market in particular. I say this to parent withs with children of all ages, while i love the Public School systems, you cannot rely on the Public Schools or these ritzy private schools to teach your kids about money, they can do a bangup job with english, history, calculus, physics, whatever. You want your kid to become proficient in a forbe language . Sure, they can learn french, spanish, chinese. But if you want your kids to become fluent in the language of finance, you have to do it yourself. I get the sense that personal finance is too simple for most educators to bother with, like its beneath them. Your High School Health class will help kids learn how to put a condom on a banana but nobody will explain why its dangerous to maintain an Outstanding Balance in their future credit card bills and believe me you cant wait until after your kids go to college to teach them this stuff. At most institutions of Higher Education students get bombarded with credit card offers that can seem irresistible if they dont know better. I took out five of them. Throwing thousands of dollars on Credit Card Debt on top of Student Loans and the they can be in the hole for decades which means you, the parents, will need to bill them out. We dont want that. Raising financially responsible children isnt about being a good parent, its not not getting hit up for cash every month even when your kids are well into their 30s. If you want your children to learn about money and what parent doesnt want financially responsible children you need to do it yourself. You need to have long, boring conversations about the dangers of high Interest Rate debt. Like the kind anyone can easily wrack up on a credit card and they need to save money coupled with the power of compound interest for generating wealth like we talked about earlier. In my view, the best way to make this dull personal finance medicine go down is with a spoonful of stock picking sugar. In other words, starting at an early age i recommend giving your children gifts of stock in highquality companies that resonate with young people. My example that ive been using since the show started is disney. Give them a couple shares a year for the holidays starting when theyre old enough to appreciate the big movie franchises, frozen, star wars, whatever. Because disney has so much going for it. So many blockbuster films over many many years in the future not to mention a terrific theme park business. By the time your kids are teenagers i think their disney holds will show a nice gain. Theres no better way to demonstrate the power of saving money and investing in stocks than having your children make money in the stock market themselves and follow it along and look as much as i like disney, you dont to go with mickey mouse. It could be any highquality company that will resonate with somebody still in elementary school. The point of getting your kids interested in stocks early is that you need to teach them a better way to think about money rather than viewing cash as something to be spent. You want your children to learn money is something that can be saved and invested to create still more money at the earliest possible age, look if you dont want to do this for your children, do it for yourself because kids who can manage their own finances are kids who wont be begging you for moolah even after youve gone into retirement. Stick with cramer. You both have a perfect driving record. Perfect. No tickets. No accidents. That is until one of you clips a food truck, ruining your perfect record. Yup. Now, you would think your Insurance Company would cut you some slack, right . No. Your insurance rates go through the roof. Your perfect record doesnt get you anything. Anything. Perfect for drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. And if you do have an accident, our claim centers are available to assist you 24 7. For a free quote, call Liberty Mutual at switch to Liberty Mutual and you could save up to 509 call today at see Car Insurance in a whole new light. Liberty mutual insurance. Okay, cramerica, time for me to check out the twitter sphere and look at the tweets you sent jimcramer. First up. You talk in your book about research. For a new investor, what are pieces of investors we should look for when stock picking the first thing is i want you to know the product. Know what it does, like it. The reason why is a lot of times stocks go down after you buy them and if you like the product youll be more inclined not to panic and get out. Then in get rich carefully i do comparisons, tell you how to rate a stock, you can do it on a numbered basis and figure out where it should stand versus others but youve got to like the Company First or i promise you in the first big selloff youll become a seller not a buyer i dont want that. Okay. Next question is from patrick. Jim, for retirement is it best in dollar cost average index funds or wait and buy on market downturns mad tweet. This is how i do it. I try to do it onetwelfth a month if i can but if theres a big break in the stock market i accelerate some i would do later in the year and put them to work. So i like to take advantage of the declines and accelerate what i put in and ive done that for years and its worked for me. Next up is larry bloom. This morning my wife said what would they do without cramer . My wife said the same thing. Look, im a teacher, ive got some books. I try to come out here every night. Its important to know what would you do without yourself. This is about empowering you, not giving you ideas. Its about how to look at them. People look at the show who havent watched it over the evolution and say all he does is trade in and out of this or that. I hope that you know that its the opposite. Longer term investing is the way to make money, index funds and mad money and doing home work and trying to figure out how to do it yourself last is jeffrey hope. Jim, would you mind sharing your sunday stock routine, please . I get thing from standard and poors, its pushed to me via email. Its hundreds and hundreds of charts. I go over each one, i do i have a file that says good, bad, question mark, try to figure out why that went up and then story idea for show and i write down each one and where they are and where they fit and then i do a piece for real money, a long piece, thats the pace on the street where i look at which trends i see and for the rest of the week i send it to my staff which stocks i dont understand and why and some theories about why we should be doing certain pieces. And it takes up almost all sunday except for when the eagles are playing. Stick with cramer. Atand that horrible smellstee are really good at hiding. Vice, oh, boy. There it is. Ohh. Ooh. [ gags ] so when you need a house cleaner or an exterminator, we can help you get the job done right, guaranteed. Get started today at angies list, because your home is where our heart is. p. That, you haveit, wait yoto rinse it first like. Bakedon . Its never gonna work. Alfredo. Dish issues . Cascade platinum. Powers. Through. Your toughest stuckon food. So let your dishwasher be the dishwasher. E . Told you it would work. Cascade. I like to say theres always a bull market somewhere. Ill promise to try to find it just for you right here on mad money. Im jim crime criamer and ill next time. Lemonis tonight on the profit, rob whoo lemonis . Its a business unlike any ive ever visited, at a startup specializing in sleek and stylish longboards. Im honestly blown away by the quality. Something is very wrong. As an outsider looking in, its kind of unsettling. The product is absurdly overpriced. Mike its 329 retail. Rob do you just want to not do well . Lemonis the owner is often absent. Mike i have obligations that lemonis well, what are they other than your business . And what scares me the most is that the employees are fleeing. Where is everybody . In droves. Josh nates no longer here. Chris quit. Mike nearly 100 turnover in staff. Lemonis why are these people leaving . Mike i dont know. Lemonis bull[bleep] if i cant figure out whats fueling this mass exodus