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 experie