So I'm filling out 401(K) paperwork. I don't like everything I see, but can live with it. I guess it's what I don't like that's important. Or why I don't like some things I see, that is.

Then again, some people may be wondering why I'm even investing at all.

I wish I had a nickel for every time I heard someone say, "I'm going to reduce my 401(K) contributions because I'm not getting anything for them right now."

It's when the market isn't giving anything back that you want to be buying. Eventually it's going to bounce back. Nobody knows when, or how high. This is a simplistic way of looking at it, but right now stocks cost about 2/3 what they cost a couple of years ago. There is no historical precedent for stock prices staying where they are now forever. Eventually they're going to come back.

So we might as well enjoy being able to buy stock at 1997 prices while it lasts, then enjoy the big gains even more, when they eventually come.

The biggest quick gains are probably behind us, given that the Dow rallied about 50% already earlier this year. Fortunately, I was making 401(K) contributions at the time, so I got in on some of that action.

So the first question is when to invest. The answer is, continuously. Trying to time the market is a fun game, but you'll be right just as often as you're wrong--if you're lucky. The problem with most investors is trying to be smarter than the market. The reality is that somewhere in the neighborhood of 90% of people who try to outsmart the market end up underperforming the market over the long term.

So if you're willing to settle for average returns, you'll automatically be in the 90th percentile. That's not a bad place to be.

So, buy when you have money. Don't worry about whether the market is up or down on payday when your contributions get deducted from your paycheck. Some days it'll be up, some days it'll be down, but you're in the game. You'll be right more often than you would be if you were trying to time things.

The second half to getting average returns is choosing what to invest in.

Most mutual funds are run by managers who are trying to outsmart the market. Some of them can give very good results in the near term. But they can just as easily lose your shirt for you.

Index funds mimic the market. Index funds invest in precisely the same companies that appear in the major market indexes, so they do whatever you hear on the news. As such, they need no managers, so none of your investment goes towards paying managers. That saves you money. And there's a 90% chance those managers wouldn't outperform your index fund anyway.

I invested my money in four funds: an index fund that tracks the S&P 500, a second fund that tracks the other 4,500 or so stocks that aren't big enough to be in the S&P 500, an international fund, and a bond fund.

My best performer? The fund with the 4,500 pipsqueak companies. But next year it could be completely different.

The international fund is there to give me some aggressiveness. For most of my lifetime, the biggest growth has been happening outside of the United States, and that gives me a chance to benefit from it. Some years I'll get big returns from it. Some years I'll lose my shirt.

The bond fund is there for balance. Bonds are boring. They usually give slightly better returns than parking your money in CDs in the bank. The idea is that in years when stocks are down, having some money in bonds ensures you'll get some growth. How much to put in bonds depends on how conservative or aggressive you want to be. The younger you are, the less you should park in bonds.

The next trick is to rebalance the portfolio. It's only something you should do once or twice a year. But the idea is that you should decide how you want your investment to be allocated. 25% S&P 500, 25% other 4500, 25% international and 25% bonds may not be the ideal mix but it keeps things simple for this example. They're not all going to perform equally. If you rebalance them, then you'll end up naturally buying low and selling high. This builds in profit and keeps your portfolio from becoming too conservative or too aggressive.

This is a good thing, because our natural tendency with stocks and other investments is to buy high and sell low.

Rebalancing means you can benefit from volatility in the market. You'll never be able to predict which is going to be your best investment and which will be your worst, but if you're rebalancing, it doesn't matter.

Follow this strategy and you aren't guaranteed to double your money in roughly 7 years, but the odds are very much in your favor. You may even do it a little bit faster.

My dad had a very different philosophy. He tried to outperform the market, and took pride on the years that he did. But there were two problems with that. He spent hours every night watching investment shows and reading investment newspapers. It was like having a second job. Even Warren Buffett says you're better off spending your time doing things that increase your earning power, so that you have more to invest, rather than trying to eke out a slightly higher return on investment.

The second problem is that he didn't outperform the market every year. I don't know all of the details and nobody does, but Dad had at least a couple of catastrophic losses in the years just before he died. I don't know all of the details because it would be inappropriate--I was 17 years old when one of the losses happened. What I do know is that Dad wouldn't let me invest in whatever he was investing in. That tells me he really knew better.

Settle for average, and you won't make dumb decisions when you really know better.

I made my dumb decision in my 20s. A friend of Dad's introduced me to a money manager soon after Dad died. At first the guy looked like a wizard. I sent him pretty much every spare dime I had for the first three years of my career. It wasn't much, because I wasn't making much, but the guy doubled my money in less than three years. I was convinced I would be a millionaire by 35.

The bottom fell out sometime in 2000. I didn't lose it all, but I lost enough. Unfortunately, along the way he parked what was left in something that tied it up until age 59, and the returns don't keep up with inflation. Swell.

The state of Missouri took away his license.

So I'm done trying to get better-than-average returns.

So what is it that I don't like about my new company's 401(K)? The investment options are more limited, and my pipsqueak 4500 fund isn't one of the choices.

So I just do the best I can, mixing it up between the S&P 500, a bond fund, and an international fund. They're paying me more than my former employer did, so Warren Buffett would approve.