Should I put money in a 401k or in a CD?

Question

I am around 20 years old and I want to start saving for my retirement.

Answer 1

401K

Answer 2

only the company that you work for will have a 401k plan. Why not try a Roth IRA which you can open for as little as $25/month. Ingdirect.com is a good one for those who don't have $1000+ to invest now.  

Answer 3

401 K it has way better tax benefits, since your employer takes it out pre-tax. Therefore, you only pay taxes on what is remaining on your paycheck. Also if your employer offers a match contribute whatever amount to need to take full advantage of getting that free money from your employer, if you can afford it. A lot of employers match 3 percent on the first 6 percent you contribute. So contribute 6 percent. Good luck to you.  

Answer 4

At 20, you should put as much money as possible into a 401k and allocate the money to mostly stocks.  If your employer offers a matching contribution for your 401k, then you really really should at the very least contribute up to the matching limit -- it's free money!

But your question reveals a bit of confusion:  the 401k is a type of account, in which investments are tax-deferred until retirement.  For most 401k plans,  you can allocate the money you put into the 401k into stock mutual funds, bond mutual funds, or possibly other investments (depending on your company).

On the other hand, the CD is a type of investment.  So you are sort of comparing apples and oranges (account types versus investments).  CDs are quite low-risk but also very low-return, and at 20 years old are almost certainly inappropriate for you, as a long-term retirement investment, unless you have the fear of risk of a 70-year-old.