The biggest mistake people make in their 20s is not investing. You should be maxing out your 401(k). If you make $80,000 a year, putting $12,000 of it into a 401(k) sounds crazy at first, but over time you stop missing that cash, and your portfolio grows.
Time is the advantage. If a 25-year-old puts $10,000 into a retirement-favored investment today and Tom puts in $100,000, when they’re both 70, the 25-year-old is likely to have a lot more money. Not investing when you’re young makes all the difference in the world.
Key points
- Not investing in your 20s is the biggest mistake.
- Max out your 401(k), even if it feels like a lot at first.
- Time in the market can outweigh a much larger contribution made later.
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