The market meltdown in 2008 and 2009 threw just about everyone for a loop. Yet even though it may have had the largest financial impact on those close to retirement who already had large investment portfolios, you may see the more lasting effects among young investors and the change in behavior that the Lost Decade has encouraged.

Lining up the X's and Y's
A recent survey from MFS Investment Management took a look at how members of Generation X and Y -- those who were born after the baby boom ended in 1965 -- have changed over time, as well as comparing them with the attitudes of baby boomers on the same financial topics. The results reveal a group of investors dealing with conflicting opinions about investing generally.

On one hand, young investors have started taking greater steps toward ensuring their long-term financial independence. Among those who answered the survey, 42% say they've contributed more to retirement accounts over the past 12 months, up from just 30% in last year's survey. Nearly half have set aside concerns that they would never feel comfortable owning stocks. Moreover, they're outpacing their older counterparts by setting more aside in nonretirement accounts and taking on additional risk, and a majority of them recognize that they need substantial exposure to international investments in order to have a truly diversified portfolio.

Yet behind these good deeds are a number of concerns. Despite their longer time horizon, young investors still have a smaller percentage of their money invested in stocks than older investors, with a huge 30% cash cushion. They fear inflation but haven't taken steps to fight it, and the huge amount of new investment options has them scurrying for financial advice from all quarters.

Investing made easy
Young investors who are just starting out certainly haven't gotten a very nice introduction to the stock market. With all the uncertainty in the economy and with geopolitical events always looming, even experienced investors have found the ride bumpier than they'd like.

But as scary as stocks may look, keeping huge portions of your money in cash earning next to nothing isn't a good long-term answer. If you have a definitive plan on what to do with that money -- waiting for pricey stocks to come down to more reasonable valuations, for example -- then that's fine. But I suspect that most young investors are keeping cash levels high just because they don't know what else to do.

For that fear, I have two simple solutions. One is to dollar-cost average into the market with broad market ETFs. With a combination of Vanguard Total Stock Market ETF to cover U.S. stocks and iShares MSCI EAFE ETF and Vanguard MSCI Emerging Markets ETF (NYSE: VWO) to give you international exposure, it's easy to get started with an ETF-based stock portfolio.

Another solution is to focus on conservative, low-volatility stocks. A quick screen for companies that combine high dividend yields, attractive valuations, and low beta values included the following stocks:


Dividend Yield

Current P/E

3-Year Beta

Altria (NYSE: MO) 5.7% 14.4 0.46
Campbell Soup 3.4% 14.5 0.25
ExxonMobil (NYSE: XOM) 2.1% 13.4 0.43
General Mills (NYSE: GIS) 3.0% 14.7 0.19
Kimberly-Clark (NYSE: KMB) 4.3% 14.7 0.40
Teva Pharmaceutical (Nasdaq: TEVA) 1.7% 13.6 0.20
Xcel Energy (NYSE: XEL) 4.3% 14.7 0.39

Source: Motley Fool CAPS.

With regular dividends and relatively cheap share prices, these stocks give you some protection against whatever the next piece of bad news might be for the financial markets. These stocks don't guarantee a smooth ride going forward, but they're reasonable candidates to get familiar with individual stocks and the way they behave.

No one said it would be easy
For most young people, investing success doesn't come naturally. You have to work and get familiar with investments before you can expect to master them. But with some courage, you can get out of the cash trap that many young investors have fallen into and instead make sure your money is working hard enough for you to give you the prospects for the more prosperous future that you deserve.

And to keep your eye on those seven stocks, track them using the Fool's My Watchlist service by clicking here. You'll get valuable updates as well as immediate access to a new special report, "6 Stocks to Watch from David and Tom Gardner." Click here to get started.

Fool contributor Dan Caplinger always tries to keep things easy. He owns shares of the Ishares MSCI EAFE and Vanguard MSCI Emerging Markets ETFs. Kimberly-Clark is a Motley Fool Income Investor recommendation. The Fool owns shares of Altria Group, ExxonMobil, Teva Pharmaceutical Industries, and Vanguard MSCI Emerging Markets ETF. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy will never get old.