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Why You Should Open a CD in Your 20s & 30s

By: Sam Inman, Chief Financial Officer

Posted on 8/31/2018 5:30:00 PM

If you’re in your 20s or 30s waiting for the perfect time to invest, it’s probably right now. The truth is, there is no “perfect” time for investing – you just need to start. The earlier you begin investing, the better.

However, research shows millennials in particular are hesitant to invest in the stock market.

Reasons why Young Professionals Don’t Invest

Starting the process early means you have a long time until retirement and thus, a greater chance to ride out economic downturns. While there are many benefits of investing early, such as countering inflation, there are a number of underlying factors keeping young adults from the market. Here are a few of the top reasons:


For those who came of age during the 2008-2009 financial crisis, it’s no wonder the millennial generation is a bit skittish towards investing. Many watched stock values plummet and are afraid to lose money. Research from Ally Invest found fear to be the number one reason young adults don’t invest. This fear, stems from the thought of making a bad investment, the amount of money needed, not knowing who to trust to help, and not knowing where to start.

Lack of Knowledge

Investing is intimidating for many millennials due to a lack of education. Surveys show the second most common reason young adults don’t invest money is they don’t know enough about it.

Lack of Money

A common belief among younger adults is the notion they cannot afford to invest. Even a small cut in their paycheck toward work retirement plans was cited as a reason not to contribute, according to surveys. Conversely, the millennial generation is big on saving, but not on investing money.

Waiting for the “Right” Time

One of the big mistakes many young investors make is to wait until the market is down or time their investments. However, trying to time the market is useless. There’s no way to predict when to get in or out of the market. Instead, you just need to get started.

Why a Certificate of Deposit is a Great Place to Start Investing

Despite the intimidation factor of investing, there are plenty of ways young adults can start investing without needing to know a ton about the stock market. A great entry-level investment for millennials is opening a Certificate of Deposit.

A certificate of deposit, or CD, is a type of savings account with a fixed interest rate and fixed date of withdrawal, known as the maturity date. However, there are key differences to a traditional savings account. While you may freely withdraw funds from a checking or savings account, with a CD, you agree to leave a specific amount of money in the account until the maturity date. Taking funds out early means paying a penalty fee. A CD is also a one-time deposit.

View our Secure Savings Accounts

The Benefits of Opening a Certificates of Deposit (CD)

There are a number of factors with a CD to help young investors become more comfortable with investment concepts.

Here are a few key benefits:

Short-Term Investment

Term lengths can be as short of a few days or as long as a decade, but in general, CDs run from a few months to a few years. This is great for millennials who are just getting started. While it can be intimidating to open something like a Roth IRA, where your money is essentially held until you are 59.5, a CD is short-term starting point. It’s great practice before making a long-term investment.

Higher Interest Rates

The interest rates of CDs are generally much higher than a traditional savings or checking account. Since millennials are already accustomed to saving money in a savings account, CDs allow investors to earn a little money through higher interest rates.

View our CD Interest Rates

Locked Interest Rates

Unlike a savings account, interest rates on a CD don’t fluctuate. The rate is locked in at the time you open the account with your deposit. While you may watch your stocks go up and down, you don’t have to worry about that with this type of account. Your money continues to earn that fixed interest rate.

Budget Control

An added benefit of a Certificate of Deposit is budget control. Rather than drawing funds when you want them, you learn to become more disciplined with your spending. Consider taking a certain amount of money you’d like to keep on lockdown and place that in your CD account. That way, you know the money will be there for a set amount of time and know it’s earning more interest than if it were in a basic savings account.

Low Risk

A major benefit to opening a CD is your funds are safe, which is a major draw for nervous investors. The National Credit Union Administration (NCUA) insures CDs up to $250,000 and guarantees you will never lose your principal amount. This makes CDs far less risky than bonds, stocks, or other (more volatile) investments. Again, if you’re just getting your investor feet wet, a CD is a safe place to start.

How to Get Started with Opening a CD

Opening a CD is really simple at Community First Credit Union. View our special offers to find the best fit for you.

Start Your CD Today!

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