The Best Advice Jim Cramer Ever Gave

Like him or hate him, Jim Cramer gets people's attention. And whether he gets his picks right or wrong, he's done at least one thing that deserves the highest praise.

Every night on Cramer's Mad Money program, you'll hear about how Cramer owns some of the stocks he talks about in his charitable trust. For skeptical viewers, it's easy to dismiss Cramer's charitable trust as a shrewd marketing ploy -- especially since it's the basis for a subscription service he offers, in which he announces trades to subscribers before he makes them for his trust. Here are some of the stocks he's publicly announced owning, according to one watchdog website, along with their recent performance:

Stock Owned by Cramer Trust

1-Year Return

Abbott Labs (NYSE: ABT  )

1.7%

Costco (Nasdaq: COST  )

(14.7%)

Foster-Wheeler (Nasdaq: FWLT  )

(68.3%)

Goldman Sachs (NYSE: GS  )

(59%)

Johnson & Johnson (NYSE: JNJ  )

(2.5%)

PepsiCo (NYSE: PEP  )

(23.8%)

Wal-Mart (NYSE: WMT  )

23.4%

Source: Yahoo! Finance.

As you can see, he owns a mixed bag of stocks, some up and some down. But regardless of how those picks have done, Cramer deserves the most credit for making the donation to charity in the first place.

Our appeal
Here at the Fool, we've just started our annual Foolanthropy campaign. This year, we're focusing on financial education -- or more accurately, the lack thereof -- in an effort to avoid repeating some of the problems that helped cause the current financial crisis. We've chosen four great charities that share our mission of teaching people how to better manage their money. And we want you to help us pick which one we should take on as our charity partner.

Whichever charities you support with your donations, it's useful to know all your options in supporting them. That's why I want to talk about how creating a charitable trust isn't nearly as complicated as you might think. It can help you not only do good for others, but also guarantee a steady stream of income for yourself and your loved ones.

How charitable trusts work
Obviously, the easiest way to give money to charity is to make an outright gift. You write a check or transfer shares of stock, and you're done. Simple.

But increasingly, people want to take a more active role in their philanthropy. They don't just want to make cash gifts and fade into the background -- instead, they want an ongoing commitment that involves constant evaluation and feedback. Also, wealthy individuals looking for tax-planning opportunities seek out strategies to take maximum advantage of charitable deductions.

That's where charitable trusts come in. They're incredibly flexible, letting you pick exactly what you want from the trust and which charities you want to support.

For instance, you can set up a charitable trust that will pay you either a fixed amount or a percentage of the trust assets every year for the rest of your life. You can start those payouts immediately, or defer them until after you retire or for a fixed number of years. As long as you meet certain IRS guidelines that apply to all charitable trusts, you have a great deal of latitude in choosing your trust's terms.

Give your investing prowess
Perhaps the most intriguing thing about charitable trusts for experienced investors: Like Cramer, you can continue managing the trust's assets on your own. Although the trust requires you to invest with the interests of the charity in mind, as well as your own, many investors find that meeting their fiduciary duties to the charity doesn't interfere with their own investing strategies.

Although it's a bit more complicated, you can also put off deciding which charity will get the trust's assets until a later date. That lets you evaluate how a charity works before committing your money to it, and it keeps the charity accountable to you.

I don't always agree with Cramer. But in my view, the single best thing he's ever done is to create a trust to benefit charity. By doing so, he's become an example to others interested in doing good around the world.

Foolanthropy 2008 is off and running! Learn more:

Fool contributor Dan Caplinger has worked with charities for more than 15 years. He doesn't own shares of the companies mentioned in this article. Johnson & Johnson is a Motley Fool Income Investor selection. Wal-Mart is a Motley Fool Inside Value pick. Costco is a Motley Fool Stock Advisor recommendation. Try any of our Foolish newsletters today, free for 30 days. The Fool's disclosure policy is a helping hand.


Read/Post Comments (3) | Recommend This Article (10)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 30, 2008, at 6:34 PM, AggGrowth wrote:

    95% people who own large Core stocks own these and would have owned it even before Jim Cramer told it.

    I dont believe that guy. It takes almost a week of serious investigation starting at current ratio to ROA to DCF model and finally competitive advantage the companyy holds. This guys walks in and attends calls and tells whether X is a buy or not. Either he is a genius who rememebers Tera bytes of Company related data or he plays bluff.

  • Report this Comment On November 10, 2008, at 3:37 PM, BaloneyII wrote:

    Cramer gets a Heads Up on the Telepromter when a caller calls in about 10 min or longer before he even talks to the person. His staff Looks up the Stock and all particulars that trigger Cramers Memory about it. If you ever called you'd know this..

    I've waited as long as 20 min...

    I agree with setting up a Charity for some of your Money.. Be it thru a Trust ,which is expensive to set up or Set up a Seperate Account/Portfolio under your name and The Charities Name or whatever name/title you want..

    I think those that have More than Enough to Fund their Retirement, have an obligation to give back to the society that gave them the Opportunity to achieve their accomplishments..

    You may Thinkg you did it all on your own, but Not by a Long Shot, starting with? Our Veterans from WWII forward. If they didn't serve? We'd be a Communist country or worse..And Since The Iraq wars? If those guys Didn't Volunteer and Join? There would be a Draft , like During Viet Nam and you'd either be In the service or Struggling to make a Living In Canada or Mexico..

    Thus I have a "Charity" going to our Veterans that served in Combat (not support-pencil pushers) ...They're getting screwed for serving and deserve awhole lot more..I think they shouldn't even have to pay Income taxes upto making $50,000 Yr, indexed to inflation for the rest of their Life..after they get out of service!

    and that's just for openers..

  • Report this Comment On November 10, 2008, at 3:43 PM, BaloneyII wrote:

    a Good Portfolio for Charities for the Common Investor?

    I use Balanced Funds..the Top 10% of them..6 of them since 99' have done a good job.. FPACX,OAKBX,LCORX,PRPFX,PRWCX &WMMRX. Ave over 10% apy past 10 yrs, beating just about other Bal. Funds, be they Index or otherwise.. Just let them make the decisions and just put your $ in them and go focus on the more Important things in life..

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