How Powerful Is That Boring 401(k)?

When we are young, saving for retirement is like thinking about buying a new winter coat on a hot July day. Both in their own time simply are not a priority.

So, here's some advice: forget about retirement. There is nothing about that distant day you need think about. Instead, let's talk about the one thing you probably will care about as much then as you do right now: making more money.

A second bit of advice, then...

Don't think of your 401(k) as a boring way of saving for retirement. Rather, consider it your best means, now and forever, for making more money. A 401(k) is, by far, the most powerful financial tool you have to make a fortune. This is true because a 401(k) gives you something no other investment alternative offers: a benevolent Uncle Sam.

Here's the deal. Your 401(k) allows you to bank investment gains without paying any taxes. In other words, every dime you make is yours to keep. You are well-advised to put this power to use because this dramatically improves your odds of making more money, now and forever.

There's a reason why Uncle Sam does not tax your 401(k) investment profits. This is to encourage you to actively manage your investment risk. Then, Uncle Sam cannot be held to account when you fail to bank your profits. Your distaste for paying taxes cannot be an impediment to locking in your gains because, in fact, there are no taxes to pay.

You can be sure, too, taking profits sometimes is entirely appropriate — indeed, the smartest thing you can do. Bank your gains (tax-free!) — they're yours. The secret to making more money with your 401(k) is investing aggressively, and taking profits when your risk of loss becomes elevated. It's a no-brainer, and no other investment avenue gives you this power. Tax-free profits truly are a gift making your 401(k) a gold mine.

Now, here's the kicker. Added money you can make today taking profits, tax-free, can become all the more money you make tomorrow when your risk of loss investing aggressively is reduced once again. So, a 401(k) also offers you the power of compound interest on steroids! Profits you bank today become larger sums you can aggressively invest tomorrow, which then puts you in line to earn greater profits still. It's one big virtuous circle, and you should use it.

That is if you want to safely make more money investing using the most powerful weapon at your disposal: your "boring" 401(k).