For the next installment of "Cramer's Playbook," Cramer's series that hopes to increase everyone's financial literacy, Cramer turned the focus to company sponsored 401(k) plans, answering the question, "should I invest in my company's 401(k) plan, or put my money to work elsewhere?"
There are many advantages, and disadvantages, to 401(k) plans, Cramer explained. 401(k)s grow tax deferred, and many employers offer a match, which is free money. Using the power of compounding, if you invested $5,000 a year starting at age 30, by the time you turned 60, your $150,000 next egg would have grown to over $511,000 given just a 7% annual return, Cramer explained.
But 401(k) investment options vary widely from employer to employer and many offer high or hidden fees that over time can put a serious dent into your returns. That's why Cramer advocated investing in 401(k)s only up to the employer match and only if the investment choices are acceptable. If not, invest in a self-directed individual IRA, where you're allowed to invest $5,500 per year.
No Huddle OffenseIn his "No Huddle Offense" segment, Cramer weighed in on eBay (EBAY) and whether activist investor Carl Icahn's view that the company should be split up makes any sense. Cramer said eBay makes a good case that its auction business helps Paypal, its payment arm, grow and vice versa. But there's no denying that eBay's share price has been stalled for a year, severely lagging that of other payment processors including Visa and MasterCard (MA).
With eBay only delivering good, not great, growth, Cramer said he understands Icahn's view that splitting up the company would bring out a ton of value for shareholders. Cramer said Icahn has a great track record of late, having invested in Netflix (NFLX) at $60 a share and Hain Celestial (HAIN) nearly $60 ago. That leads Cramer to think this activist may be onto something when it comes to eBay. To watch replays of Cramer's video segments, visit the Mad Money page on CNBC. To sign up for Jim Cramer's free Booyah! newsletter with all of his latest articles and videos please click here. -- Written by Scott Rutt in Washington, D.C. To email Scott about this article, click here: Scott Rutt Follow Scott on Twitter @ScottRutt or get updates on Facebook, ScottRuttDC
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