<prompt> Human: Hi all, freshly employed and out of college and a bit lost overwhelmed over all these investment strategies. I just wanted to see if PF could help me clear things up.Theres a lot of options Ive been reading about and Im kind of lost to whats the best. 1 Whats the difference between 401k and Vanguard IRA as retirement accounts. I know 401k has tax incentives, is there any reason I would split between them both rather than put it all in my 401k? 2 How do mutual funds compare to retirement funds? Is it just a matter of mutual funds being more liquid than retirement? 3 Ive heard that all of the above are just alternatives if you dont want to manage your own finances too much and pale in comparison to the potential returns all-be-it much riskier of stock investments. Additionally since stocks are more liquid would it just be better to manage personal investments all the years they would be sitting in a 401k? I hear the term magic of compound interest, but nobody Ive talked to has actually done the math. To sum up, Im under the impression that each option is a matter of risk and liquidity in the order of the title. Im pretty sure theres much more than that however.Thanks in advance!  <response>: Re: 1 A 401k and an IRA offer essentially the same benefit, you get to deduct the income from your taxes now, and instead pay tax on it when it comes out of the account at retirement. But the details differ a little: Your employer runs your 401k and you can only pick among the choices offered by your employer. Sometimes these choices will be fine, other times theyll suck. With an IRA, you can put the money in any investment, such as a low fee account with Vanguard. Your employer probably matches some of your 401k contributions. So this is essentially free money, and you should take it. You can put far more into a 401k than you can into an IRA, the cap for a 401k is 17,500 a year, for an IRA its just 5500. And if your income is too high, you cant do an IRA at all.Re: 2, I think your terminology is confused here, and I dont know quite what youre asking. A mutual fund is basically a bunch of stocks you buy in a bundle, and will be fairly liquid. A retirement fund is probably just a term for a mutual fund geared towards retirement at a specific date, but would be just as liquid as anything else.Re: 3, Investing in stocks where you pick which ones to buy is a fools errand. People who buy individual stocks consistently underperform the market as a whole. Dont trade individual stocks.In general, the best thing you can invest in for very long term growth is a stock index fund with a super low expense ratio that tracks a broad range of stocks. You can do that in the blanket of a tax advantaged account like a 401k or IRA, or in a taxable account. Vanguard sells a bunch of these, and is usually where people on this forum will send you. 