These are employer-sponsored, tax-advantaged plans for retirement savings. You fund these accounts by having money automatically pulled out of your paycheck. Then that money is invested so it can grow into a retirement nest egg.

The main difference between a 401(k) and a 403(b) is that 401(k) plans are offered by for-profit companies and 403(b) plans are offered by government and nonprofit organizations. Two of the most common types of 401(k) and 403(b) plans are traditional and Roth.

With a traditional, you invest pretax dollars (and that lowers your taxable income now). When you take money out in retirement, you pay taxes then—on the amount you and your employer contributed as well as the growth.

With a Roth, you invest after-tax dollars (that means you pay taxes on that money now). When you take money out in retirement, you don’t pay taxes on your withdrawals or the growth—but you are responsible for taxes on the amount your employer contributed.

This is how money in your retirement portfolio is divided between different types of assets, like stocks, bonds and cash. For example, stocks or mutual funds might make up 85% of your portfolio while you also have 15% in cash investments, like a money market account. That means your asset allocation is 85% stocks and 15% cash.

Compound interest is the interest you earn on interest—that’s the simple (and probably not very helpful) definition. So let’s look at an example. Let’s say you invest $100 and it earns 5% each year. At the end of the first year, you’ve got $105. The next year, your whole $105 earns interest—not just your original $100. See what happened? You started earning interest on the interest you earned. Amazing! Over time, that compounding interest really adds up.

Contribution limits are the maximum amount of money you can invest into accounts, such as 401(k)s and IRAs, in a year. Limits can be based on age, marriage status and annual earnings.

An IRA is an account that allows you to invest a certain amount each year for retirement. Two of the most popular IRAs available are traditional IRAs and Roth IRAs. Each plan has its own tax advantages, so learn which is best for your hard-earned money before you invest.

This is the percentage rate that consumer prices—things like milk, eggs, gas and more—are expected to rise by in the future. For investing, the goal should be for your long-term investment performance to outpace inflation. Inflation typically hovers around 3% a year, which may not seem like a big deal, but if you’re planning to live 20 or 30 years in retirement, it can take a huge bite out of your nest egg.

An HSA is like a savings account you can use to pay for qualified medical expenses—but with a few awesome perks. You can contribute tax-free money to an HSA, invest and grow your money tax-free inside your HSA, and spend tax-free from your HSA (on qualified medical expenses). It’s a tax-free triple play!

There is a catch though: To use an HSA, you have to be enrolled in a high-deductible health plan (HDHP). Once you open an HSA, you can contribute right out of your paycheck through pretax deductions, or you can add after-tax money on your own and claim it as a tax deduction.

This is your money, or other assets, that have been invested or saved with a specific goal in mind—like retirement.

When you invest your money, you’re opening yourself up to the risk of losing some of it as the stock market fluctuates. Before you invest, it’s important to understand what you’re investing in and how much risk you’re comfortable with. You can also spread your money out into different types of investments (this is known as diversification) to help reduce risk while still allowing your money to grow.

These are investments you can cash out in a time frame that’s not strictly tied to your retirement planning. Common examples include money market accounts, high-yield savings accounts and government bonds. Short-term investments usually offer lower rates of return but let you quickly withdraw money.

This is any type of investment, financial account or savings plan that gets some sort of tax break. It could be tax-exempt (you won’t pay taxes on), tax-deferred (you’ll pay taxes when you make withdrawals), or tax-advantaged in some other way. These are things like IRAs and 401(k) plans.

The TSP is a retirement savings and investment plan for federal employees and members of the military. It includes the same tax benefits as a 401(k), and many employers offer matching contributions.

When you buy a bond, you’re actually loaning a corporation or government agency money. They promise to pay you back with interest. Since they’re often backed by governments and guarantee a steady return, bonds have a reputation of being a “safe” investment and attract a lot of investors. 

But we don’t recommend betting your retirement on bonds because their returns—which barely outpace inflation—just aren’t impressive, especially when compared to mutual funds.

A CD is a special kind of savings account that comes with a fixed interest rate. Basically, it’s like giving a bank or credit union a loan from your own pocket. In exchange for lending them a lump sum of your money for a fixed amount of time, they agree to pay you interest until the CD “matures” (that’s the term banks use for when a CD reaches its end date). 

But historically, their returns don’t keep up with inflation (the mysterious force that makes things more expensive over time). So, they’re not exactly a winning strategy for long-term investing.

Commodities are raw materials like gas, oil, beef, gold and grains. Commodities trading is when you buy and sell these things, and there are many ways to do that. The basic principles of supply and demand typically drive the commodities markets, but factors like weather or political turmoil can play a role in prices.

ETPs are a common method for buying and selling commodities. An investing pro can help you weigh the pros and cons—but we don’t recommend ETPs since we think the potential rewards don’t balance out the risk. 

ETFs are funds that are traded on a stock market exchange. They generally mirror a market index, like the Dow Jones industrial average or the S&P 500, by investing in most or all of the company stocks included on that index. So, they’re a lot like mutual funds, except they can be traded like stocks.

ETFs that average a 10–12% annual return can be good to include in a taxable brokerage account as part of a long-term investing strategy (once you’ve maxed out retirement accounts like your 401(k) or Roth IRA).

Mutual funds are professionally managed investment portfolios that allow investors to pool their money together to invest in something. There are many different types out there that you can talk with an investing pro about. We generally recommend investing evenly across four different types of growth stock mutual funds: growth and income, growth, aggressive growth and international funds.

Inside a typical growth stock mutual fund are stocks from dozens, sometimes hundreds, of different companies, so you’re basically buying bits and pieces of all those companies. Some of those company stocks go up while others go down, but the idea is that the overall value of the fund should go up and beat inflation over time.

Real estate investing comes in different shapes and sizes. You can purchase properties and rent them out. Or you can flip houses. The idea with any of these investment opportunities is to (hopefully) make a profit.

Your real estate investing funds should be separate from your retirement savings—that’s why we don’t include real estate as part of the investment calculator.

Stocks represent shares (or tiny pieces) of a company. When a company goes public, they sell these small shares to people to fund growth. Picture a big ol’ sheet cake that someone cuts up into lots of small squares. If you purchase one of those squares, you own that slice. When you buy stocks, you become a part owner of the company. Although we don’t recommend single stocks, we do recommend that you invest in growth stock mutual funds, which contain stocks of dozens (even hundreds) of different companies.