Why You Should Open a CD in Your 20s & 30s
Updated 1/23/26
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* that Gen Z is hestitant to invest due to market volatility, fear of financial loss, and lack of trust.
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:
Economic Uncertainty and Past Volatility
Gen Z and younger Millennials grew up amid recessions, inflation spikes, and market crashes like those in the 2020s. This history makes them wary of investments that could lose value, pushing them toward safer options like CDs instead.
Financial Literacy
Many Gen Zers feel unprepared, with surveys indicating* about 63% of Gen Z workers don't feel confident in managing investments. Many young workers may not know where to turn for trusted financial education that would boost confidence in investing.
Distrust in Financial Institutions
Nearly 20% cite low trust* in banks and markets as a barrier. Shaped by scandals and fee-heavy products, they prefer transparent, low-risk vehicles from community-focused providers like credit unions.
Focus on Immediate Stability
High living costs and delayed milestones, like homeownership, lead Gen Z to prioritize short-term security over long-term growth. Gen Zers are likely to avoid stocks to protect cash for emergencies or near-term goals.
Fear of Financial Loss
Stories of overnight losses in volatile assets like crypto lead young workers to avoid the risk of investing. Their "financial nihilism"* favors predictable returns over speculative gains.
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 and gen z 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.
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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.
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.
Community First Can Help
Opening a CD at Community First has several key benefits, including:
- Competitive rates designed to help your savings grow faster.
- Flexible terms to align with your target strategy.
- Expert guidance from credit union professionals who understand your goals.
- Convenient online tools that make tracking and managing your CDs simple.
Contact us today and see how we can help you meet your financial goals.
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*All information contained in this blog is for informational purposes only. The credit union makes no representations as to the accuracy, completeness, suitability, or validity, of any information. The credit union is not responsible for any errors, omissions, or any losses, injuries, or damages arising from its display or use. All information is provided AS IS and with no warranties and confers no rights. The credit union is not responsible for material that is found through non-credit union links posted on this blog site. Ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.
