Investing is an important part of planning for the future. However, the options and strategies you should use can vary depending on your age. Market volatility is part of every investor's journey, and understanding what investments are best for you at any age can help you make smarter decisions.
401(k)s are a popular option for those in the workforce. All 401(k)s are defined contribution plans, funded by employee (and sometimes employer) contributions. Employees generally can't withdraw money before age 59½ without paying tax penalties, so they are ideal for those who are just starting out in their careers and want to save for retirement. With more time to invest, you can get more tax benefits and can take advantage of compounding returns.
Once you reach your 50s, you may want to consider opening a certificate of deposit (CD). CDs are a type of bank account that lets you earn interest at a set rate. Opening CDs in your 50s, 60s, and beyond could make sense if you're shifting out of riskier investments, such as stocks. When opening a CD at any age, there are certain considerations to take into account, such as the maturity date, minimum balance, and early withdrawal penalties.