401k's are retirement accounts set up by you through your employer. Part of your wages before taxes are put into this account and grow without being taxed until you take them out. This sounds great, but it is best when your employer matches your contribution to some extent (free money!). Eventually, you will have to pay taxes when you take money out, years from now, and that is the rub. You will usually be better off in the end investing your money on your own outside of a 401K, but they ain't bad. (All that I have came through 401K savings p;rograms.)
IRAs are Individual Retirement Accounts. Unless you make a ton of money, you qualify and can set one up on your own. You can only contribute earned income, though. There are several flavors, but the best is the Roth IRA. You put after-tax money into it and it a) grows tax-free, AND b) withdrawals are TAX-FREE FOREVER (or until Congress changes its mind, but for now it is the best deal going). You have a lot more control over IRAs than 401ks.
What to buy inside a 401k or IRA? Read this web site:
He makes a case for low cost index funds, primarily from Vanguard. Vanguard is one of the lowest cost sources of mutual funds and will help you set up your IRA. Call them and talk to them. It is free and I have found them very helpful. You can also visit their web site and read more:
This is not rocket science. You can do it all yourself
and beat the pants off most of the professionals, believe it or not. The "professionals" make money selling you stuff, not by making you rich. This means your friendly banker and your friendly insurance broker and your friendly financial planner, too. (Why do you think they are so friendly?) You do not need to pay anyone for the best advice.
The best advice is, first, SAVE. I recommend 20% of your gross pay, but that is hard to do. Sit on it and educate yourself on investment in the meantime. If you are uncertain, put it in a Roth IRA in an interest-bearing account at a bank until you feel comfortable investing on your own. You can start slow. It's OK. But that won't be enough to retire on all by itself, so you have to learn about investments. See the above two sites again. You do not have to know all the fancy stuff, honest.
Best of luck,
Ed The Gypsy