Choosing the right investment tool for retirement can seem like a daunting task especially with all the different options you can pick from and it isn’t uncommon to feel lost. Fortunately we’re here to help, and hopefully after reading this post, you’ll feel just a little bit less lost. As promised, here is a crash course on the different types of investment tools and if each is right for you.

CNN Money published a neat slide show article about the most common retirement tools and all the information that you need to know about 401(k)s, Traditional IRAs and Roth IRAs.

1. 401(k)

Most companies offer 401(k) plans as part of their benefit package for their employees. Basically, money is taken straight from your paycheck pre-tax and added to your 401(k). You won’t be taxed on your 401(k) earnings up until you withdraw from your account. Be sure to contribute at minimum the amount your company is willing to match because after all, it’s free money.

2. Traditional IRA

You can contribute up to $4,000 a year to your IRA and up to $5,000 a year if you’re over 50. You can also deduct your contributions off of your tax return and you won’t need to pay taxes until you start withdrawing.

3. Roth IRA

The main differences between a regular Traditional and Roth is that with a Roth, you can start withdrawing your earnings once you turn 59.5 years old. You can also withdraw your contributions anytime, tax-free and penalty-free. And if this isn’t sweet enough, Roth IRAs don’t force you to start withdrawing your earnings at 70.5 years old.

4. Retirement Funds

On top of 401(k)s and IRAs, retirement funds are the next level you can choose to take in planning for retirement. Target Retirement funds are offered by several investment banks and mainly consist of a mix of different mutual funds that are managed by experienced portfolio managers. Although retirement funds carry some investment risk, they have a greater amount of return compared to 401(k) or IRAs. For you finance-adverse people out there, this means you’ll get more money back per dollar you invest. Usually returns above 10% are considered good. CNN Money provides a list of the top mutual and target retirement funds currently offered.

Now personally, this is what I, as a young twenty three-year old with an average income, would do. First, max out my company’s 401(k) by contributing as much as my company is willing to match, which is usually around 3-6%. Second, max out my IRA by making sure I’m putting in $4,000 a year. And if I’m planning on buying that yacht when I’m 60 years old, which I am, start a Target Retirement Fund by putting in $3,000, which is the usual minimum investment amount, and contribute $300-600 a month depending on how much I can afford. If I do this for the next 35 years, I’ll be ready to cruise in that yacht with a happy grin on my face. Vanguard provides a useful FAQ on their target retirement funds.

401(k)s and IRAs: Grow your money, shrink your taxes and Money 70: The best mutual funds you can buy are from CNN Money.

Vanguard Target Retirement Funds is from Vanguard.