Many people don't realize it, but when it comes to investing, you really have dozens and dozens of different options available to you. Stocks, bonds and mutual funds are the most common forms of investment, but they are only the tip of the iceberg when it comes to all the many ways you can build long term wealth. Let's take a look at these different investment tools to see which ones are right for you.

Most casual investors are familiar with stocks since they have become such an important part of today's business world. If you own stock in a company, say, Microsoft or Disney, you own shares of that company. There are different types of stocks that allow shareholders different levels of control, but for the sake of this basic article, let's look at what stock is and how you get it.

There are essentially two ways people end up owning stock. You can get stock with your pay check if you have worked for a company long enough, or you can buy stock outright through a broker, directly through a company or with an online stock trading company. Many long time employees don't even realize that they own stock until they get a call from their broker asking them what they want to do with it. Stock is essentially like owning a piece of a company. When that company does well, the stock price goes up, and those shares that you own are then worth more money. You can sell them and turn a profit on your stock. Alternately, you can hold on to it and hope the value goes up even further. You can also hold out hope that the stock splits, so that you go from holding, say, 100 shares, to holding 300. People who own stock for decades in major, successful companies can have their stock split dozens of times and watch their small, initial investment grow into the foundation of their investment portfolio. If you own enough stock in a company, you can actually have a say in how the company is run and controlled.

With bonds, you are essentially loaning money to an entity so that they may invest it and put it towards the future of their company. Many of us are familiar with savings bonds or war bonds that countries sell during the time of hardship or conflict to raise money. These bonds come with a particular interest rate attached so that on a later date, you can cash in your bond and get your money back, plus a small profit. If you own enough bonds in a company, you can turn a steady profit, although bonds historically have much less risk and much lower profits than stocks. They can be an excellent low risk investment for people who want to turn a profit but want to keep the possibility of them losing everything to a minimum.

As you can see, stocks and bonds are a great way to make money and invest, and since there are stocks and bonds with all sorts of different risk levels, you can know as you get started how risky your investment is going to be. You can also look at investing in mutual funds, which are collections of stocks or bonds picked out by investment firms that are expected to turn a profit as a whole. Again, just like with individual stocks and bonds, some mutual funds feature a lot of risk and a lot of reward, while others are "safer." It is important to note, though, that there is no such thing as a no-risk stock or a no-risk bond.