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This seems very contradictory.

When you pay into a pension, what's the money held in? It will be either cash or some fund (actively mangaged, passive index fund, ETF, a bond fund etc).

When you save (point 2), what's the money held in? Cash? How much and for how long? If it isn't cash, then it will be invested in something, and if it cash, how is that less of a financial trap than investing in stocks?

You either spend 100% (or more) of what you earn, or you have an investment decision to make when it comes to any leftover money. Keeping your money as cash in the bank might not seem like an investment decision but it is and it comes with its own set of risks and rewards.

Well when I say max out pension it isn't really an investment decision more than it is "this is how much money the government said I need to pay them for them to take care of me when I'm 70", which is really not even about investing. If you want to treat it like an investment, IMO it is like a tail hedge in case you don't acquire appreciable wealth during your work career.

Cash is less of financial trap because you are in charge of it. the investment decision with regards to being in cash is very simple: I don't have a great investment to make, so I will keep the cash until it comes. Passive income only works for really wealthy people.

> Well when I say max out pension it isn't really an investment decision more than it is "this is how much money the government said I need to pay them for them to take care of me when I'm 70"

Depends on what you mean by pension. In the UK most modern workplace pensions and all self-invested personal pensions are similar to 401k in the US - all the money is contributed by you and/or your employer, you can access the money after a certain age, and you have control over how that money is invested in the meantime.

And for something like state pensions, once you have contributed for 10 years, you get the same pension; you don't have the option to contribute more so you can get paid more in retirement.

> Passive income only works for really wealthy people.

Investing doesn't necessarily mean passive income, and passive income doesn't need to be complete replacement for any other income to be a good idea. If you can put $5000 in stocks and get 4-8% a year return (unless it's your only $5000) that might be better than keeping it as cash and losing 8-10% to inflation. The percentage return you'll get will be the same as the percentage return a wealthy person investing millions in the same fund would get. And the returns you'll get from investing don't need to be lifechanging to make investing a better option than the alternative.

So 100% cash (if possible)?

> My general advice in this regard: Passive "income" for people under 25 is a pure financial trap. You need to be making active "income" and saving otherwise. All your money you earn right now should ideally be spent on developing and honing whatever edge you have in the area that interests you. And it obviously isn't the financial markets.

I think this is very true, although I'd go one step further and say that saving really isn't that important when you're young. I honestly think the smartest things I did in my twenties were to eat takeaway food for almost every meal and pay a bit extra to live really close to work. People told me I was wasting my money, but all the extra study I got done helped me 5x my salary by the time I reached my thirties.

Just for context, I am under 25 and I am in education and as mentioned in the post I have barely any expenses.

The thing is, isn't having the money in the bank an investment too? I just thought if I'm already keeping it there (which is risky although maybe less so) then why not at least try to educate myself about maybe what more I could do with it. I'm already doing the things you mention but I'm purely talking about the leftover money that is just sitting there...