Classes, and you can graduate from college speaking three languages and have a deep understanding of quantum physics. But you know one thing they dont teach you in high school . Financial literacy. You can be an econ major and learn nothing about personal Financial Planning or how to balance a darned checkbook, let alone how to invest your money wisely. Money is not talked about in education. Its like the third rail of the whole educational system. And thats why im on a Constant Mission to teach you about every aspect of managing your money, so youll be able to become a better investor, both when it comes to retirement investing and playing around with what i call your discretionary mad money portfolio. Which is a big reason why i wrote get rich carefully to begin with. Most of you even, really, even if you dont own any individual stocks directly, you probably the stock market, probably a 401 k plan where you keep the bulk of your retirement funds, which is why i want to take a moment to talk about retirement. For those of you who have been living in a cave for the last 40 years, 401 k plans are the main way americans save. Theyre offered by your employer, and among some of the great vehicles out there. For those of you who are 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. And im going to tell you some things that you wont hear from the socalled experts. This shows different. At this point, its pretty much become conventional wisdom that you have to invest in your 401 k . That only an idiot would not contribute to a 401 k plan. A lot of experts will even tell you to max out your 401 k if you max out enough money for that to be feasible. The maximum contribution tends to be going up over time from 17,500 in 2014 or 18,000 in 2015. From your pretax income. However, im not one of those people who think you should max out your 401 k . Im not someone who is going to sing the praises of 401 k and tell you its the key to financial salvation. Because the truth is, 401 k plans can be a real mixed bag. Boo but a couple of really great features and a lot of bad ones, too. And those bad features will eat away at your returns year after year, sometimes through fees that are almost totally hidden from you, that actually are quite upsetting to me. So let me lay out the good, bad, and ugly of 401 k plans and tell you whether it makes sense to contribute more money to your 401 k or put that cash to a better use somewhere else. First the good. The best thing about a 401 k is its a taxdeferred investment vehicle. You never pay a penny on gains of profits you make, which allows your money to compound year after year, compounding, fantastic, decade after decade. Totally tax free until you decide to start making regular viewers of this show and readers of my books know im a huge believer in the power of compounding. Let me give you an example here. Suppose youre 30 years old and you start investing 5,000 a year to your 401 k . And youre not paying any income on that pretax income. If you choose your investments wisely, you should be able to generate as much as a 7 return on average. Over course of the next 30 years, youll be contributing 150,000 to your 401 k plan. But because that money is able to compound year after year without any Capital Gains taxes, by the time youre 60, that 5,000peryear pretax income, well, that could be worth over 511,000. If you had to pay taxes on dividends and Capital Gains, that number would be much it would be a lot lower. Perhaps as much as 110,000 lower. Thats how important compounding is. And avoiding well, lets say the tax deferred nature of the thing. You only ever have to pay taxes on your 401 k money once, and thats when you decide to withdraw it. And since most of you are retired, most of you will end up paying a lower rate than if you were taxed on it when you first earned it. Thats one major reason to like 401 k plans. The second, many, but not all, employers will match or partially max your contributions. So for every dollar you invest, your employer may throw in 50 cents. Thats free money. You never want to walk away from free money. But if you dont get money, i think its a much less compelling option. But there are a lot of things about a 401 k plan that can be really bad. Which is why if, again, you dont get a match from your employer, i believe its a better idea to save for retirement via the individual retirement account, or i. R. A. , which has the same exact taxfavored status of a 401 k . You can only contribute 5,500 a year to your i. R. A. Or 6,500 if youre over 50, but when you change jobs, you can roll over 401 k into an i. R. A. Why is it a better option . First of all, 401 k plans vary widely from company to company. Some give you a terrific range of choices, but some give you a 401 k plan with limited options. Sometimes you only get to choose between a dozen, a couple dozen at most different mutual funds. So for those of you cant pick your own stocks in your 401 k , my number one rule, before you contribute money to your 401 k plan, you have to make sure it gives you the option to put your cash into something thats actually worth investing in. If you cant pick your own stocks in a 401 k , you want a nice lowexpense index fund that mimics the s p 500. However, if your 401 k doesnt even offer that, shame on you well, shame on your company then go with a selfdirected i. R. A. From a fullservice discount program. Im not talking about fidelity, so you can have control over your money. One more negative. In a mutual fund, you have to pay that mutual funds fees. This is really important. But your 401 k administrator, the company the people your employer hires to run these plans, they will also charge fees. Boo meaning that all of the money 401 k saves you on taxes, a great deal of that can be clawed back by these fees. Have you ever looked at your statement and wonder why your 401 k holdings arent increasing in value why they should be, fees are probably the reason. Where does all of this leave us . Heres my bottom line on retirement investing. The company you work for offers an employer match for your 401 k contributions, then you want to put money into your 401 k until that match is maxed out. No reason to pass up on free money. And after that, put any additional Retirement Savings into an i. R. A. But if theres no employer match or if theres an employer match, but your 401 k doesnt give you any options that are worth investing in, with you would do better to skip the 401 k and go straight to an i. R. A. Immediately. Debora in california, debora . 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 frequently will behave in a contradictory fashion to the report . For example, a company can report good earnings, but guide lower on the revenue and earnings Going Forward and the stock will go up. The second where you might think 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 im not really going to take this, debora. You have no gun to your head, unlike the hedge funds, 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 longerterm view in the comfort of your home without any noise, go listen to the call or read it. Go to yahoo finance, get some of the research, street. Com, cnbc, get some research, max the expectations with what was said, take a longerterm view. Thats the advantage of the individual investor. You dont have to play that day. Doug in nevada. Doug caller bountiful booyah, mr. K. Okay. Caller yeah, my question is, i have a 401, currently substantial. Would it be advisable for me to change that to a selfdirected i. R. A. . The match. If you have if the employers matching, no. You want to get the max you want to get the max match, so to speak, then after that, yes. Or but if its six of one or half a dozen of the other and the funds arent that good that youre allowed to be in your 401 k , then, yes, i want you to choose a selfdirected i. R. A. Let he help take control of your financial future. When it comes to retirement, if your company matches your contribution to 401 k , then max that out. Thats really important. But if you dont get an employer match or dont have investable options, go straight to the i. R. A. On mad tonight, you just got your diploma, now what . And two busy to invest in individual stocks . Thats fine. Ill help you put your money behind the next best things. Plus, there are many roads to health investment. Lets chart your course. Stick with cramer. Announcer dont miss a second of mad money. Follow jimcramer on twitter. Tweet kramer, madtweets. Send jim an email to madmoney cnbc. Com or give us a call at 1800743cnbc. Miss something . Head to madmoney. Cnbc. Com. Uh, hello geico . Yeah, i was just talking about your emergency Roadside Service and how its available 24 7 and then our car overheated. What are the chances . Can you send a tow truck please . Uh, the location . Youre not going to believe this but its um. Its in a tree. I wish i was joking, mate, but its literally stuck in a tree. car horn honking a chainsaw . No, no, all we really need is a tow truck. Day or night, geicos emergency Roadside Service is there for you. Theres a more enjoyable way to get your fiber. Try phillips fiber good gummies plus energy support. Its a new fiber supplement that helps support regularity mmmmm, these are good nice work, phillips the tasty side of fiber, from phillips. Enough pressure in here for ya . Im gonna take mucinex sinusmax. Too late, were about to take off. These dissolve fast. Theyre new liquid gels. And youre coming with me. You realize i have gold status . Mucinex sinusmax liquid gels. Dissolves fast to unleash max strength medicine. Lets end this. Olay regenerist renews from within. Plumping surface cells for a dramatic transformation without the need for fillers. Your concert tee might show your age. Your skin never will. Olay regenerist. Olay. Ageless. And try regenerist microsculpting eyeswirl. It instantly hydrates if you run everyday, or if youre young or old. No matter who you are a heart attack can happen without warning. Heart attack, a bayer aspirin regimen can help prevent another one. Be sure to talk to your doctor before you begin an aspirin regimen. If everyone in this country went insane and decided to turn american into cramerican with me as your king or general or grand poobah, you Better Believe i would be making changes and changes pronto, but because this is a show about money, ill stick to the financial elements of cramer regime. Because it drives me nuts that we dont teach our young people about how to handle money. Would it be so crazy if you had to take a class in personal finance before you graduate from high school . I think it should be mandatory. Like those Awkward Health classes they make everyone take that can get a little graphic at times. Sadly, im nobodys dictator, but i do control what we talk about on this show. So can i just take a moment to 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 for example, lets say youve got a really lousy credit score and you want to get married. Congratulations youve just inflicted your horrible credit on your new spouse. Now, neither you nor your partner will be able to qualify for a loan to buy a car or a home or perhaps even just get a darned credit card. These things matter in life. They say money cant buy happiness, but ive often found that piece of cliched conventional wisdom to be dubious at best, because being broke is a major buzzkill, as i know firsthand from living in my ford fairmont. So what the heck should young people do with their money . First and foremost and always, you need to invest. Thats the only way youre going to be able to achieve financial freedom. And by freedom, what i mean is, living a life where youre not totally 100 dependent on your im always thrilled when i see members of the younger demographic were taking an active hand in managing their own money. Too many people start saving and investing way too late. That makes 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, many more start investing before theyre truly ready, when they are, in fact, Better Things for them to be doing stuff with their money. So weve got to really drill down on this. Its why im going to give you three lessons. And a caveat for all of those who are recently out of college. Lets start with the caveat. You need to pay off your credit card debt. Before. But its especially true for younger people, potential since Credit Card Companies have gotten really aggressive about offering credit to college students, no matter how much market, if youre carrying a balance on your credit cards, then its going to eat into your returns. I know this myself firsthand. And longterm, the interest on those credit cards will probably be greater than the profits you can make from investing, at least on a percentage basis. So just pay your darned credit month. Auto mate it with your Credit Card Company if youre worried. Youll be tempted not to. I cant defeat that credit card debt, no matter how many great stock ideas i have on the show. Now lets get to my three lessons for young investors. First, this is really for all the young people who have recently graduated and actually for everyone out there, regardless of education level. You need to save money. But i recognize that not everyone has an inherent predisposition to save. We cant all be natural cheapskates. And i also acknowledge that telling you to save over and over 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 actually be a lot of fun. We try that on the show, right . We try to do some entertainment within the teaching, whereas leaving money in a savings account or a certificate of deposit just feels like, well, kind of joyless for a lot of people, not to mention the fact that the returns are so small that theyre basically yes, indeed, ill use the word, meaningless. Plus, if you invest your savings in the market, it will be a lot to spend that money on things that you might not need, because it will be sitting in stocks that youll like, and youll have to sell those stocks to get your money back, and theres a natural predilection to not sell once you buy. Not only is this a terrific way to trick yourself into saving, but also has the added advantage to being the smartest place to put your money in the financial perspective right now. Yes, traditional savings vehicles like money market funds, see those rates, check them every week, cds, check those every week, they give you hardly any return at all. Its a waste to put your savings in them when that cash could be making you a lot more money by owning stocks in a brokerage cap and working with your money, get your hands dirty with your money. This is a much more targeted piece of advice. While youre still young, you can afford to take a lot more risk than an old foegy like myself. In other words, when youre in your 20s, you can get away with riskier, some would say more reckless strategies, like owning more speculative, singledigit stocks where the potential upside could be huge, but so is the potential downside, or playing with options or generally being a lot more aggressive with your money. 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 highrisk stocks and end up losing your money when youre young, because youve got 40odd years to earn back your losses. So youve got to take those risks. Older investors, youve got to be more cautious. The closer you get to retirement, the more conservative your investing strategy has to be. More bonds, more highyielding stocks, fewer speculative stocks trading in the single digits. But if youre in your 20s, you should invest like a young person, not an old person. Forget about bonds, people, please, im begging you. Theres 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 high return year after year. So young people, i want you to take this advice to heart, especially because i suspect that the recent College Grads most likely to invest in the market are also the ones who are the most responsible, the most prudent about their money. And prudence is great when to live with, within your means, or deciding how much of your paycheck to save every monthly. But for young investors, being too prudent is actually being reckless. 20somethings, live a little, at least in your stock portfolios, take some risks swb forget about bonds for the next days. Play around with some speculative names, maybe tiny Biotech Companies with a lot of potential, even if they blow up on you and go all the way to zero, you have your whole life to make that money back. And its never too early to start investing for retirement. Use your 401 k if your job has one, especially put some money in a roth i. R. A. , which is ideal for young investors. Investing is a great way to trick yourself into saving money. You might otherwise spend that money. Beyond that, remember when youre young, you can afford to take a lot more risks in your portfolio. And its never too soon to start contributing to your 401 k or i. R. A. , especially if that i. R. A. Is a roth. Lets go to mike in tennessee. Caller hey, jim, how you doing . Love your show. We watch it all the time. Thank you. Thank you. Caller my question is, a few episodes ago, you said that you did not like buying a stock if the peg ratio got above 2 . Right. Caller and im wondering whether or not you use peg ratios as a sell signal . And if you do, how high would you let it go before you pull the trigger and sell the stock . When its more than two times the growth rate, i get nervous. There are some stocks that dont trade on earnings, and you have to be careful. Like a colt stock, but the typical stock, if it trades for lower you know lower than two times that rate of growth, im fine with it. But it is a red flag once it gets higher. A penny saved is a penny earned investing is a great way to trick yourself into saving money. Its never too soon to contribute to your i. R. A. Or cell phone rings well the squirrels are back in the attic. Exterminator. Can i call you back, mom . He says its personal this time. If youre a mom, you call at the worst time. Its what you do. If you want to save fifteen percent or more on car insurance, you switch to geico. R its what you do. Where are you . R its very loud there. Are you taking at zumba class . I take pictures of sunrises, but with my back pain i couldnt sleep and get up in time. Then i found aleve pm. Aleve pm is the only one to combine a safe sleep aid plus the 12 hour pain relieving strength of aleve. Im back. Aleve pm for a better am. Enough pressure in here for ya . Im gonna take mucinex sinusmax. Too late, were about to take off. These dissolve fast. Theyre new liquid gels. You realize i have gold status . Mucinex sinusmax liquid gels. Dissolves fast to unleash max strength medicine. Lets end this. Degree motionsense. The worlds first antiperspirant with unique microcapsules activated by movement, that release bursts of freshness all day. Motionsense. Protection to keep you moving. Degree. It wont let you down. Ugh heartburn no one burns on my watch try alkaseltzer heartburn reliefchews. They work fast and dont taste chalky. Mmm. Amazing. I have heartburn. Alkaseltzer heartburn reliefchews. 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 funds, you name it. Better. Sometimes having more options just makes it impossible to decide which ones are right and which ones are wrong for you. And you have never had more exchangetraded funds and mutual funds than you do right now. Theyre everywhere. At this point, theres so many can make your head spin. As a side note, i hate the way many of the sectorbased etfs, the ones that let you buy and sell an entire group like the banks, the home builders, i hate the way theyve been warping the way the whole stock market trades. Thats something you can find out more about in get rich carefully. And if youre in these etfs, i have to urge you to find out about them. But the important thing is this. You have all sorts of etfs and mutual funds out there, and they can all advertise. The companies that run these funds, they want your money. And one of the biggest mistakes you can make as an individual investor 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. Basically half the households in america have exposures to mutual funds. Many of you dont have a choice. A lot of 401 k plans dont give you an option. So i think all else being equal is an i. R. A. 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 most likely well, to put it delicately, youre, uh, getting hosed. Now, i dont want to paint with too broad a brush here. There are some 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 funds, mutual funds where there are people deciding which stocks or other stocks to buy and sell, weve got some problems. Unlike hedge funds, Mutual Fund Managers dont get paid for delivering performance. They collect fees from their the amount of money they make depends entirely on the size of their assets under management, aum, we call it, which means their biggest incentive is not necessarily to do well, something that good performance can really help with, but what theyre really being paid to do is bring in more money for more investors. Salespeople for their funds. And thats part of the reason why in study after study, year after year, it has been shown that the vast majority of actively managed mutual funds underperform their bench marks, like the s p 500. In other words, if you invest in an actively managed fund for large capitalization in u. S. Stocks, then its performance will most likely 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. So even if your fund does manage good youll end up with an overperforming investment instead of being in a simple index fund that mirrors the s p 500. Of course, there are some active funds out there with fabulous managers that can deliver consistent results. But when a mutual fund delivers such Great Results for so long, if the manager is a decent person, with theyll stop accepting new investments, put their foot down. Because at a certain point, when a fund becomes 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 to be in an actively managed one, the fees are too high, and the evidence that the bulk of them underperform is too staggering to keep going that way. You know that i think your 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 down. A cheap lowcost index fund that mirrors the market as a whole. One that mimics the s p 500. Index funds have ultralow fees and with an S P Index Fund, youve got a vehicle that will let you participate in the strength of stock market, without having to spend the time picking individual stocks. This may sound like a real simple solution. Dont overthink it. The whole point of putting your money in a fund is to save you the time and money required to manage your own stocks. Thats why i think its insane when people start owning multiple mutual funds. By its nature, a mutual fund should be diversitied. Theres really know reason for home gamers like you to have any exposure to them. If youre going to take the time to try to play individual sectors, that time would really be much better spent picking individual stocks. As for etfs, in most cases, these vehicles are for trading, not investing, so i dont like them. Many etfs rebalance every day and that can take a real told on any kind of longterm performance, their not set up for longterm performance. Gld, the etf i like to play for gold. But in general, if youre not a pro and not managing a portfolio and not day trading every single day, then you probably shouldnt be fooling around with those etfs either. Heres the bottom line. At the end of the day, i think a cheap s p 500 index fund is the leastbad way to passively manage your money. Better than the vast bulk of actively managed mutual funds. But an index fund owns everything, the good, the bad, and the ugly. And if you do have the time, i think you can beat the performance of an index fund by picking stocks yourself, which is the entire reason i do this show every night. If you dont have the time, though, then dont overthink it. Just one cheap S P Index Fund is, indeed, the best way to go. Mary in maryland. Mary . Caller booyah, jim mmhmm. Caller jim, i started listening to you a while back. Then i started buying stocks on your advice. Now im looking at my portfolio here, and jim, jim, my 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 educramer us on adrs and Exchange Rate exposure . Sure. Weve got the bad republic going on overseas, but heres the way i look at it. If you want to own individual stocks and the businesses are good, i dont care where they are. I dont care about the currency, if the business is that great, the stock will go higher. But understand if youre buying an adr and its a european country, for instance, and the euro is being weakened by central bank issues, you will not do well, even if the stock does well. All things being equal, and you dont have a country or continent trying to debase their currency, im fine with it. But if they are, youve got to old u. S. Of a. , which i think is a real smart way to invest. Matthew . Caller baa bbb booyah, jim. Back at you. Caller im 23 years old, recent college grad and new to the workforce and just started max out my i. R. A. Realizing time is on my side, i want to go for an aggressive allocation to take on risk, but im unsure of how to do that exactly. So i want to get your suggestions for someone starting out to the timing investing. How would you go about well, with i think that you want to have the fastest young growth stocks, and those are tend to be found in technology sector, but also, of course, in biotech. Now, dont go too crazy. Im willing to have one of two stocks of companies that arent making money, no more than that. But those are the most fertile area. Junior growth stocks, companies that are worth 1 billion or less. A lot of them are too small to one of those two. These are all fine. You can do those, because if you lose money, youve got the rest of your life to make it back. Sorry, not so much mutual love here. Picking stocks is still the best way to manage your money, but if you dont have time, just please, please, please, go with the cheap s p 500 fund over most ive been on my feel all day. Im bushed yea me too. Excuse me. Coming through ride the gel wave of comfort with dr. Scholls massaging gel insoles. Theyre proven to give you comfort. Which helps you feel more energized. All day long. Let me tell you about whether it make sense for you to use a regular 401 k or an i. R. A. , or for you to go with a roth, which is a term im sure youve heard countless times, but may not understand. I know ive talked about the benefits of using an individual retirement account, or i. R. A. For short, or a 401 k plan to invest for retirement. Im not going to beat a dead horse here, but this is a subject i get a ton of questions about. Should i put my money in a roth account or a regular one . Why dont we start with a roth i. R. A. . I think that aside from the earned income tax credit, the roth i. R. A. May be the single greatest thing our government that has done for lowincome families since the end of the war on poverty, which at best possibly winning. Ive told you all about how a regular i. R. A. Lets you take pretax income, invest it, and then your gains can compound year after year, decade after decade, totally taxfree, until you decide to withdraw that money when you retire. A roth i. R. A. Works differently. With a roth, you make contributions with aftertax income. So, in other words, unlike a regular i. R. A. , putting money into a roth wont decrease your tax bill. On the other hand, though, once your money is in a roth i. R. A. , you will never pay taxes on it again. As long as your cash remains in your account, you dont pay Capital Gains tax or dividend tax. And when you withdraw it, which you can do without penalty after the age of 59 1 2, you dont pay any incomes tax on your withdrawals. This is fabulous. In other words, with a roth, you pay taxes now so yo dont have pay any income tax 30 or 40 years from now when you retire. Theres one more positive point about a roth. You can withdraw the money youve invested, not your gains, and you wont get hit with a penalty. Which is what happens if you try to withdraw money from a regular i. R. A. Thats very different from a regular i. R. A. , where you dont pay any taxes 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, which can be a very high rate. Which means when youre trying to decide between a roth i. R. A. And a 401 k or a regular i. R. A. Or a 401 k , youre basically deciding whether it makes more sense to pay income tax now with a roth or wait to pay income tax once youve retired with a regular account. In other words, you have to figure out whether youll be the in the higher tax bracket after youve retired or a lower one. This is a complicated question and has a lot to do with the specifics of your situation, your career, and how old you are. A quick rule of thumb, for anyone whose marginal tax rate is 25 or less, which is most of america, i think you ought to go with a roth. Better to take the hit up front compound tax free for the rest of your life. For those of you who dont have the time to pick your own diversified portfolio, the smartest thing you can do is park your money in a lowcost index fund that mirrors the s p 500. As you get older, you can add some bonds, but until you actually retire, stocks should make up the majority of your retirement investments. I know ive said this before, but ill keep repeating it until they take me off the air, because its so necessary, but contrary to conventional wisdom. I want stocks, not bonds, until later. How about a roth 401 k . This works just like a roth i. R. A. , meaning you make contributions with aftertax income and never pay taxes on that money again, except since its a 401 k plan, it has a much higher contribution limit than an i. R. A. For example, the government says the 401 k contribution limit for 2015 is 14,000, which i. R. A. Contributions are capped a mere 5,500. And unlike a roth i. R. A. , a roth 401 k doesnt have any kind of no matter how much money you earn, you can take advantage of one of these, as long as your employer gives you the option. If you believe that taxes inexorably headed higher over the course of your life, then a roth 401 k where you pay your taxes now and pay nothing in the future is so the way to go. Even if youre making a lot of money in the present. But i think that beliefs mistaken. For those of you young people who have only become politically conscience under the obama administration, it may seem like theres no way to stop the tide of hire taxes, but history says different and i believe we can close the deficit without about as political as im going to get on this show. But at the end of the day, this is beyond our control and therefore beyond our ability to predict. The bottom line, the lower your present income, the lower your taxes. A roth 401 k or a roth i. R. A. Lets you pay those low rates now and never worry about taxes again for your retirement money. So the less you make, the more likely it is that a roth is for you. And when youre saving for retirement, dont worry about what could go catastrophic wrong 30 or 40 years in the future. Just worry about making the best choices right now. Mad money is back after the break. Gree gave women a motionactivated wristband to understand how much they move,. And created degree with motionsense. The worlds first antiperspirant activated by movement, it has unique microcapsules that break with friction to release bursts of freshness all day. Keeping you fresher with every move. Motionsense. Protection to keep you moving. Degree. It wont let you down. Did you know theres a cough liquid that lasts for twelve hours . Try delsym twelve hour cough liquid. Its advanced formula releases powerful medicine that acts fast while its extended release medicine lasts for 12 hours. Try delsym. Theres a more enjoyable way to get your fiber. Try phillips fiber good gummies plus energy support. Helps support regularity and includes b vitamins to help convert food to energy. Mmmmm, these are good nice work, phillips the tasty side of fiber, if you want to get a real read on the industrial economy, you could do a lot worse than checking in with honeywell, the incredibly wellrun company with its fingers in all sorts of businesses, including Climate Control system, turbo equipment for cars and truck engines, as well as many more things. We got a chance to chat with dave cody, the chairman and ceo of honeywell, you saw the bulk of the interview yesterday, but a walkandtalk with cody where he showcased some of honeywells intriguing new products. I want you to take a look. This is the water leak detector we were talking about. This is one of the top ten at the Consumer Electronics show. And this can actually send a message to your iphone, telling you that youve got a problem. Amount of gallons saved . What do you think . In the country . You know, that i dont know. This is more a case of preventing accidents. So instead of having a flooding in your house or and you dont know about it for three days because its happening down in the cellar or happening at a vacation home, this way you know. And you can react to it right away. I had a burst pipe at my beach house, dave. Its going to cost me a fortune, frozen pipe, had no idea about it. There you go. This is what i need. Ill tell my Insurance Company they should cut my bill if i get this. This gets us into metering for gas, water, and electricity. And the software that connects them all. This one may not look like much, Cash Register for gas. So already we think a 5 billion acquisition, something good, accretive in 2016 . It will be accretive this year, yes. Numbers for a lot of the analysts yet. This allows you to purify industrial waste water using bacteria that are naturally occurring. Any refinery would use this, but its going to be able to go beyond that. So were just starting to roll this out there. This is based on designs that we use for refineries today. We do this with 70 less footprint than other you were going to say, its sustainability, in some companies, just to be able to track young people, they have to be able to come on you think apple doesnt have sustainability in its new building . They cant get the great computer scientists unless they do. Unless they do, excellent. Well, well do very well there. Now, you want to watch the super bowl next year while youre on the plane . Yes, i do and so does everybody else on my plane. You want kaband. Which is, we call it jet wave. Sat. Heres why its significant, versus what you see today legacy is go go or via sat. We found that consumers are more important than wifi access than they are bathrooms. But this is 20 times less expensive and 100 times faster. Okay, ill go go. This will also allow you to do stuff for pilots. So, for example, on weather, i can an hour or two hours ahead of you, because they fly in a line, telling you whats happening up here, so i can start to route my planes differently. When combined with our 3d weather radar, which were the only guys that have, allows you to avoid storms, avoid hail damage. What were they doing before . Just kind of winging it . No, what they would do is so well say that they had information of a storm, instead of say, cutting it a little more closely, theyd have to do this wide berth. Yes. This one is pretty neat. We showed you a smaller version last year. These things are selling unbelievably well in china. China . Air purifiers. Oh, yeah, well, no kidding. And the stuff works great. We sell them online this is not the usual, someone bought your nameplate. Youre making this . This is an allhoneywell product. Made in china. Okay, so that because i know sold in china, made in china. You again said in your last quarter that you expect china up again. There are no companies that know that except for you. Why is that . Well, theres two reasons, i think. One is, we try to stay pretty close to the market generally and have a marketbased product, but the other one is, youve heard me talking for about five years about becoming the chinese competitor. Yes. And i think theres still too many multinationals who look at their competition as other multinationals. When in reality, your competition is the local guy in china. In the world. Right. And starting to view them as your competitor and acting that way sounds simple, but theres a huge mindset change that has to happen to do that. And weve been working on this for a while. This one we cant resist, because this is a difference between a chinese firefighter and an american firefighter, beyond just size, as we say, but theres actually a difference in how they approach fires. So you have to what we call this huey, the honeywell user experience, you have to design for the local market. Chinese firefighters stay outside and push the water in, whereas american firefighters tend to go into the building, as needed. So theres much different equipment that this requires. And when you look at this mask, what were able to do with this mask is theres actually a headsup display that shows, that tells them their own biometrics, so they have a sense for that, along with like what kind of air do they have in their scuba tank, which we also make. But this allows them to operate a lot more safely and it transmits all of that biometric and other data outside, so that another thing youve taught me is not something in the peoples no, nor do they want to. You dont want them saving money, right . And every year, youve also said that things get tougher. Yes. Its not like theyve gotten easier. Well, safety regulations, as life becomes more valuable, in a worldwide . Society, yeah, regulations tend to go up, because you realize, you dont want people dying or getting hurt. This one, of course, we cant resist showing you a jet yen. This htf7000 is part of our growth story as a company. This is more of a Growth Business than the 7h7 . Oh, yeah, think of it of 7, 800 up to 8,000 pounds of thrust. Think of it for biz jet applications. And one of the things you have said over and over, the metric is the number of flying hours. At the end of the day, what flying . And if you take a look that over a long period of time, its pretty darned consistent. People are flying more every year. Only when you hit a bad recession year does that change and then it goes right back on the path again. And with the world becoming more wealthy, meaning families more disperse, businesses more global, travel is going to continue. Its just is gonna. How many of the things we see here did not exist three years ago . Oh, almost all the stuff you saw in there. And its all additive to earnings . Oh, yeah, yeah, this is all stuff that we dont measure share, generally, because i find people focusing on the denominator instead of the numerator. What you want them doing is figuring out how to grow sales faster than your industry and faster than your competition and thats what we focus on. I guess thats why you always say, why after 14 years are people surprised. Because you keep running and keep issuing new products and those are what generates that organic growth that youre most we call it seed planting and were constantly focused on seed planting. Dave cody, congratulations on what looks like another suite of products and another unbelievable year. Not so bad. Fantastic job. Thanks, man. Ur technology. Technology. Say, have you seen all the Amazing Technology in geicos mobile app . Mobile app . Look. Electronic id cards, emergency Roadside Service, i can even submit a claim. Wow. Yep, geicos mobile app works like a charm. Geico. Expect great savings and a whole lot more. Did you know theres a cough liquid that lasts for twelve hours . Its advanced formula releases powerful medicine that acts fast while its extended release medicine lasts for 12 hours. Try delsym. Dry spray . Thats fun. Its already dry no wait time. This is great. Its very soft. Can i keep it . laughs all the care of dove. Now in a dry antiperspirant spray. Ugh heartburn no one burns on my watch try alkaseltzer heartburn reliefchews. They work fast and dont taste chalky. Mmm. Amazing. I have heartburn. Alkaseltzer heartburn reliefchews. Holy cow. Weve got to get to some of your tweets that youve been sending me jimcramer madtweets, including ones that are very nice and smart. Here we go. Ken egan tweets, i love you, jim. I love you, kenneth egan 23. Hows that . Its requited in my book. Some people call me jack tatum, wants to know, why care about shortterm hit if you have longterm Investment Strategy . Amen. How many times have i said, i like xyz stock, and it goes down that day and people want to burn me in effigy, or burn me in scalding oil. It doesnt have to be that day. Think a little longer term. Here we have diego who wants to know, aside from your own, what other books should Home Investors have under their belts to help them trade manage better. Getaplan. One up on wall street and beat the street, peter lynch. Theyre available on amazon. One up on wall street and beat the street. You might want to look at david darsts book. He taught me a lot at Goldman Sachs and then moved on. But david darsts books are very good. Up next, drhoy84 tweets, do uh ever sleep or did one of your biotechs provide you with a no, i dont sleep. Now btw, which i think stands for by the way, i am now following your know what you own motto or kwyo. Cleaned my portfolio this week. Yolo. You only live once, so i totally agree with you heres crabo44. Im in the market because of you, sir. Just give all the haters a big booyah keep teaching us what they want to grow, jim. Let me give you a little 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 unless you have allergies. Then your eyes may see it differently. Only flonase is approved toprelieve both itchy, watery eyes pand no other nasal allergy spray can say that. When we breathe in allergens our bodies react by over producing six key inflammatory substances that cause our symptoms. Most allergy pills only control one substance. Flonase controls six. And six is greater than one. Complete allergy relief or incomplete. Let your eyes decide. Flonase. 61 changes everything. Working on my feet all day gave me pain here. In my knees. But now, i step on this machine and get my number which matches my dr. Scholls custom fit orthotic inserts. Now i get immediate relief from my foot pain. My knee pain. I like to say theres always a bull market somewhere and i promise to try to find it just fo r you right here on mad money. Im jim cramer and ill see you next time. Ashley roberts voiceover night on 1st look [slurps, lips squeak] [laughs] Ashley Roberts voiceover were pouring on that Southern Charm and even getting a little nasty. Wait, you need to pause, though. Charleston nasty. Yes. Is that a good nasty or a bad nasty . Ashley roberts voiceover its south carolinas oldest and most refreshing city. Ooh, strong and unusual gonna get me good tonight. Ashley roberts voiceover were getting loose in charleston, honey. [squeals] i see a dolphin Ashley Roberts voiceover and it all starts right now. [theme music]