The Costliest Mistake A Young Investor Can Make....

...Is not owning enough stock

The Website Nerd Wallet did a comprehensive study of the cost to millenials of not investing in stocks

Avoiding the Stock Market May Cost Millennials $3.3 Million 

You can read the details of the study on the linked article . But this chart from the article comparing 100% stocks to a savings acccount or simply keeping the cash unde the mattress (or in a non interest paying accoun t such as many checking accounts.

Of course the advadvantage younger investors have is their long time frame leaving them the power of compounding as ividends and gains and in riding out any short term declines in the market.

The advantages for those younger investors is even greater if the take advantage of the tax advantaged accounts by making full use of the tax advantaged vehicles of Roth or Traditional IRA and employer sponsored 401k. With the availability of no commission ETFs at several major brokerage firms a young investor could set up monthly deposits of a broad based ETF such as a total stock market index fund to meet the $2000 maximum IRA contribution. If the young investor has access to an employer sponsored 401k opting for the maximum contribution not only builds more tax deferred savings it works on autopilot..it is money the young person never sees in his bank account. Should the employer be one of the relatively few that offers a match to the 401k contribution passing up on that i simply passing up on free money. Although for many recent years companies have been eliminating the match on 401k contributions, the WSJ reports that there are some signs that the trend has reversed.

This chart from the WSJ shows the growth of wealth when an employee taskes advantage of the employer match,

Of course the same rules that apply to all investment portfolios apply here: a diversified portfolio of low cost ETFs or mutual funds. Given that the portfolios should be all stocks one or two ETFS a total US and/or a total world index ETF should suffice,