401K is a common retirement plan in the USA. It is where you have money automatically taken from your pay check without paying taxes on it, normally a company will match what you put in up to a certain amount like 5% of your income pre tax so you put in 5% and they put the same dollar amount into an account where it is invested into the stock market. You cannot take it out until retirement age or else you pay a very heavy tax for taking it out early. For example, I put int 7% of my jobs income into a fidelity.com account and my company matches up to 5% so the other 2% they don't . The Fidelity company takes that money I put in and buys stocks. I partially get to choose which stocks if I want. The idea is that the company stock prices goes up when I retire along with my 7%+ I put in my whole life and I will have enough to keep living and not work when I retire. Since the stocks in big companies generally increase it is like a compounding interest. Does that make sense?