Jim Cramer, the host of Mad Money, recently pointed out a significant gap in the American education system, emphasizing that financial literacy is rarely taught in schools, from middle school all the way through college. According to Cramer, managing personal finances is one of the most essential skills, especially when it comes to preparing for retirement, hence he laid out a few lessons for his viewers.
“So I’m betting most of you, even if you don’t own individual stocks, still have some money in a 401k plan… They’re offered by your employer and they’re among the greatest tax-deferred investment vehicles out there along with the IRA.”
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However, Cramer was quick to clarify that he does not view the 401k as a perfect solution for everyone. While it does offer valuable tax benefits, including tax-deferred growth, it can also be somewhat of a mixed bag. Explaining what 401k is, he said:
“In plain English, that means you pay no taxes on what you put in and then you never pay a penny of capital gains taxes on the profits you make within your 401k, which allows your gains to compound year after year, decade after decade, totally tax free until you decide to start making withdrawals.”
While this can be a great advantage, Cramer cautioned that there are instances where other retirement options might be more beneficial. He pointed out that in some cases, an Individual Retirement Account (IRA) might be a better option than a 401k, as it offers the same tax-deferred advantages. He also advised that when changing jobs, it is a smart move to roll over your 401k into an IRA.
Cramer advised that individuals should do this whenever they switch employers or find themselves between jobs, ensuring that their retirement savings stay under their control. Cramer recommended opting for a self-directed IRA through a full-service discount brokerage like Fidelity as this gives individuals more direct oversight of their money. He added:
“The bottom line on retirement investing: If the company you work for matches your 401k contributions up to a certain point, take them for all they’re worth. But other than that, an IRA is the superior way to go, especially if your 401k plan doesn’t give you any good investment options.”
10 Stocks on Jim Cramer’s Radar
Our Methodology
For this article, we compiled a list of 10 stocks that were discussed by Jim Cramer during the episode of Mad Money aired on January 24. We listed the stocks in ascending order of their hedge fund sentiment as of the third quarter, which was taken from Insider Monkey’s database of 900 hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Stocks on Jim Cramer’s Radar
10. Realty Income Corporation (NYSE:O)
Number of Hedge Fund Holders: 23
A caller asked if REITs like Realty Income Corporation (NYSE:O) are worth investing in, highlighting the stable dividend income and lower interest rates. Cramer was enthusiastic about REITs and said:
“I, I have been toying with the idea of owning Realty Income because they pay monthly checks. I think it’s a really, really good situation… Realty Income, I really like the idea.”
Realty Income (NYSE:O) is a real estate investment trust (REIT) recognized for its monthly dividend payments, and specializes in net lease properties across multiple sectors. Parnassus Investments stated the following regarding Realty Income Corporation (NYSE:O) in its Q3 2024 investor letter:
“Realty Income Corporation (NYSE:O) is poised to benefit from lower interest rates. Because its commercial tenants are mostly on 10-year leases, the stock’s steady dividend stream is attractive in the current environment of slow deceleration in the economy with rates coming down. In this favorable backdrop, the company also continues to execute well.”
9. VICI Properties Inc. (NYSE:VICI)
Number of Hedge Fund Holders: 35
VICI Properties Inc. (NYSE:VICI) is a real estate investment trust with a portfolio of 93 experiential properties, primarily in the U.S. and Canada, all managed under long-term lease agreements. During the episode, he stated, “VICI, I don’t like the last few things that they’ve bought. I’m not gonna touch VICI.”
When Cramer was asked about VICI (NYSE:VICI) in October 2024, he was a little more positive about it as he said, “You got a 5% yield, so it’s a little bit better than treasuries. It’s a well-run company.”
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