Four secrets for getting the most out of your company’s 401(k)

Here’s how to get the most out of your company’s 401(k):

1 Set your savings rate high to max out your contribution early in the year

You can invest up to $18K per year into your 401(k) (plus $6,000 if you’re 50+).  Regardless of how much you plan to contribute, you don’t have to split your contributions evenly throughout the year.  If you set the savings rate high, you can invest the entire amount you plan to invest in your 401(k) early in the year, then save up for other goals for the rest of the year.   

I set the portion of my salary that goes into my 401(k) between 50% and 100%, depending on how much I have in my checking account.  Why do this?

401(k) contributions are taken before income tax deductions (but after social security and medicare).  If you allocate 100% of your income to your 401(k), you’ll see substantially more of your income go into your investments.  This allows you to keep your money in the market for a longer time.    (Note: verify that you will still get 100% of your company match if you do this.)

In my case, I qualified for my employer’s 401(k) late in 2016, and was just able to max it out by the end of 2016, and then maxed it out again in early 2017.  $18,000*2 = $36K.  The US market is up about 11.6% this year, earning me around four thousand dollars just for investing early.   I didn’t invest a penny more – I just invested earlier in the year.  Not every year will be so good, but overall, you’ll see a higher return by setting a higher savings rate to get your money in the market at the start of each year.

You might find it hard to live off a lower income for part of the year, but most people spent less after the end of the holiday season, and you may have a Christmas bonus to kick off the savings.

2 Choose low-priced index funds

The list of funds available for your 401(k) can be both imposing and disappointing.  If you have experience choosing your own investments, it is very likely that your preferred funds are not on the list.   Chances are that most of the options are overpriced – their expense ratio is higher than what you would pay in a typical investment account.     

My strategy for choosing what to invest in is simple: I look for the lowest cost index fund that matches my desired portfolio.  For example, my 401(k) has a “Nationwide S&P 500 Index A Large Cap” fund with an expense ratio of .6%.  The equivalent ETF from Vanguard charges only 0.04%.  So my 401(k)’s index fund has higher costs, but still much lower than 1.78% for some of the mutual funds my 401(k) offers.  Don’t just choose funds that happened to have the highest return this year.  They probably got lucky, and if they are mutual funds, the higher expenses will eventually probably lead them to underperform index funds.

3 Build a diversified portfolio and schedule rebalancing

Here is current 401(k) portfolio:  

  • 40% “S&P 500 Index A”
  • 40% “Small Cap Index A”
  • 20% “International Index A”

I built this in 30 seconds simply by searching for the word “index” in the list and verifying that these are the funds with the lowest cost on the list.  This is not a very scientific ratio, but it balances long-term performance with the risk from different market categories.  Whatever your risk tolerance, I suggest choosing several low-cost index funds that are different enough to offer diversification.   My 401(k) also allowed me to set up automated rebalancing every quarter to ensure that my portfolio sticks to this ratio.

4 Rollover your 401(k) into an IRA when you leave your job

Normally, you can rollover your 401(k) into an IRA when you leave your job. I was able to roll over my 403(b) (like a 401(k), but for nonprofits) last year when my existing employer switched to a new provider.  If you have a chance to rollover your company 401(k) to your preferred broker (see my post on choosing one), you should absolutely do so because:

(1) the IRA account providers out there (I suggest a robo-trader — I use Personal Capital) are almost certainly better than whatever your company uses – cheaper, with more investing options, and superior customer service
(2) you don’t want to leave a trail of isolated retirement accounts from each job over the course of your career, especially if you want to build a tax-optimized portfolio using a robo-trader that automatically allocates securities in a tax-efficient manner.

Caution: There are three reasons why you may not want to roll over your 401(k) if you’re toward the end of your career and have been with a company for a while: (1) some states (details here) protect 401(k) investments from creditors more than IRA’s (2) 401(k) allow current employees to delay required minimum withdrawals, and (3) 401(k) allow you to take penalty-free (but not tax-free) withdrawals after age 55 under certain conditions – but not IRAs.

Here are the 10 cards I keep in my wallet

As promised, here are all the cards I keep in my wallet*, with a rationale of why I acquired each card.  Jump below the image to read why I got each card:  


I have two criteria for credit cards:

  • No annual fees: I don’t spend enough to warrant paying an annual fee for any card.
  • Cash back only: I don’t mess with complex point systems which only encourage spending.  I just want some money back on my bill.


American Express Blue Cash

My favorite card.  Why?   

  1. 3% back at supermarkets
  2. 2% back at department stores and gas stations, 1% everything else
  3. Great customer service.  I once unintentionally purchased a $40 car wash at a broken gas station terminal.  I had no way to prove that I didn’t want or use it, but Amex figured it out and got my money back.
  4. Very high credit limits.  I requested a 3X increase of my credit limit shortly after getting this card.  After Amex approved it, it was easy for me to request a high credit limit on my other credit cards.
  5. Random bonuses.  See below: I got $200 for signing up, $300 for referring 3 friends, and $100 for paying for UpWork with it (which I was already doing).  If you sign up using this link, you’ll get a $100 sign up bonus.  (Disclaimer: I get a bonus from Amex if you sign up.  Yay!) Store Card

The Store card offers 5% back on all purchases from Prime members.  I don’t use this card anymore because I got:


Amazon Prime Rewards Visa Signature Card

This is a great card for Amazon Prime Customers and has replaced my Store Card for purchases:

  1. 5% back on all purchases.  You can use your cash back to pay at checkouts.
  2. No foreign transaction fees.   This is very rare for a card without annual fees.


Discover it Card

I mostly keep this card around because I’ve had it since 2004.  However, it has a few nice benefits:

  1. 5% cash back in rotating categories (currently restaurants)
  2. Discover doubles your cash bank in your first year.  (That’s 10% of your money back!)
  3. No foreign transaction fees (this saved a fortune while I lived in Asia)


Costco Anywhere Visa Card by Citi

Why do I like this card:

  1. 4% back at any gas station
  2. 3% back at restaurants
  3. 2% back at Costco.  With the Executive card, that’s 4% back on all purchases.


Chase Debit

I use this at ATMs about 3x per year.


E*Trade Debit Card

This is a secret card that E*Trade does not advertise.  You can link a debit card to your brokerage account if you snail mail them a letter asking for it (there is no other way to request it).  This card allows me to keep only what I need to pay the bills in my checking account.  If I need cash in a hurry, I can sell some stocks and immediately cash them out from any ATM.


Chase Freedom: Cash Back Credit Card

Chase Freedom offers 5% back in rotating categories.  It’s too much of a hassle for me to track the categories to actually use it, but it’s easy to get approved for this card, so it’s good for beginners.


Chase Ink Business Cash

This card is for my personal business.   I like it because I get 5% back for office expenses and Chase gave me $300 just for signing up.  Using a business card makes it easy to separate my personal and business expenses.


The American Express Green Business Card

This corporate card is for my day job.   


Bank of China Debit Card

My primary card during my five years in China.  I left my account open in case SHTF and I have to bug out to Asia.  Also, Bitcoin.

Buckhead Fight Club

Physical fitness is important too 🙂  Come spar with me Tuesday, Thursday, or Saturday!


* About 7 of these are actually in my wallet most of the time.

The sapient mind is a parasite

The conscious, rational mind is a parasite which has hijacked the homo sapiens species for its own purposes.

For billions of years, life on earth was organized by genes directing primitive bio mechanical systems. Recently, the genes began building neural networks with built-in instructions, and even the capability to pass learned behaviors between generations. But the genes screwed up royally when they enabled the replicators doing their bidding to override their programming and develop a culture of their own.

You see, when homo sapiens invented culture, they gained the ability to overrule their genetic programming and do whatever their rational facilities wanted – to an extent. Culture evolves far faster than genes and enabled humans to totally transform their way of life, their environment, and nearly their entire planet. Culture increasingly made evolutionary development irrelevant, as humans increasingly directed both their own and other species sexual selection according to volitional rather than instinctual principles. Although humans are still biologically quite similar to their primate cousins, their newfound dependence on a tool-using culture has led them to evolve such that they cannot survive without tools in nearly all of the environments that they currently dwell in.

By no means is the victory complete. While humans do use their rational facilities to cooperatively provide for their sustenance and raise their offspring, the automatic, and instinctual processes of their brains often sabotage their efforts and cause them to lose their focus on goals, kill each other, or frustrate attempts to mate and reproduce. However, with the passage of time, the domination of the volitional layer is becoming ever more complete. Even within my own brief lifetime, most humans worldwide have visibly increased their capacity for manipulating abstract concepts to cope with the complexity of life in an information economy.

While I’ve called the mind a parasite, don’t mistake that identification for a pejorative. My sympathies — and self-identification lie firmly with my volitional consciousness, not with the animal body that it operates. We may soon face the option of abandoning our biological firmware and operating our minds on a superior computational platform, and I would welcome the possibility. We have already begun the process of offloading computation to our computers whenever possible. It may not be long until humans regard our biological basis as an inferior and unnecessary vestige of our origins.