Mutual Funds IRAs and 401Ks

A 401(k) is a type of retirement savings account in the United States, which takes its name from subsection 401(k) of the Internal Revenue Code (Title 26 of the United States Code). 401(k) are "defined contribution plans" with annual contributions limited (currently to $17,000). Contributions are "tax-deferred", deducted from paychecks before taxes and then taxed when a withdrawal is made from the 401(k) account. Depending on the employer's program a portion of the employee's contribution may be matched by the employer.

An Individual Retirement Arrangement (IRA) is a form of retirement plan that provides tax advantages for retirement savings in the United States. The term encompasses an individual retirement account, a trust or custodial account set up for the exclusive benefit of taxpayers or their beneficiaries, and an individual retirement annuity, by which the taxpayers purchase an annuity contract or an endowment contract from a life insurance company.

A mutual fund is a type of professionally-managed collective investment scheme that pools money from many investors to purchase securities. While there is no legal definition of mutual fund, the term is most commonly applied only to those collective investment schemes that are regulated, available to the general public and open-ended in nature.

A hedge fund is an investment fund that can undertake a wider range of investment and trading activities than other funds, but which is only open for investment from particular types of investors specified by regulators. These investors are typically institutions, such as pension funds, university endowments and foundations, or high net worth individuals. As a class, hedge funds invest in a diverse range of assets, but they most commonly trade liquid securities on public markets. They also employ a wide variety of investment strategies, and make use of techniques such as short selling and leverage.