Stocks, bonds, commodities, CDs, mutual funds, buy low, sell high … the world of investing can be a confusing jungle of terms and figures.

However, with a little knowledge, anyone can be a successful investor.

The first step to take in becoming a savvy investor is to learn the language. Though there are hundreds of different investments you can make, here are some of the basics:

Stocks

Lowell Foster, a certified public accountant and personal financial specialist with LarsonAllen Financial in Austin, says stocks are the most common type of investment people make. When you purchase stocks, you essentially buy a piece of a company and become an owner of that company. Depending on how many other people purchase little pieces of the company, you may earn dividends, which are profits paid to stockholders.

"Stocks have more risk potential, but they also have more potential rewards. You can potentially earn more money if the stock does well," Foster says. Of course, he adds, "there is no guarantee you will get that money back someday."

Bonds

If the possibility of not getting your money back from the stock market makes your stomach tie itself into a knot, you may want to consider something a little less risky, such as bonds.

Bonds are simply "when you loan money to somebody," Foster says. "They pay interest and at some point, they will pay you back everything, so you get the original amount you paid, plus the accumulated interest."

For instance, he says, "Hormel has borrowed money from banks and other companies for new buildings and expansions," so the people who loaned them money purchased bonds that will be paid back if the company continues to operate.

If the company does go belly up, you might not get your money back, but bonds can be a safer investment than stocks. "It's not necessarily guaranteed, but the company does promise to pay you back," Foster says. "Bonds are a little bit more of a sure thing and because of that, there's not as much potential for earning a lot of money on them."

Certificates of Deposit (CDs)

If you're looking still for something with a higher guarantee than bonds, a CD may be a better investment for you.

"A CD is a loan to a bank, just like a bond is a loan to a company, but it's guaranteed that if the bank goes bankrupt, the first $100,000 you have in that CD will be paid to you," Foster says.

This guarantee is only good if the bank is insured by the Federal Deposit Insurance Corporation (FDIC), a federal agency which deposits money into banks so customers don't lose all their money if a bank goes bankrupt. However, most banks are FDIC insured. If you aren't sure if your bank is FDIC insured, you can go to the FDIC's Web site (www.fdic.gov) and check.

Mutual Funds

If it's diversity in what companies you invest in, mutual funds are a good option. Mutual funds are an easy way for an investor to invest in a large number of companies. Foster explains that when you send money to a mutual fund, the investment firm in charge of the fund "takes all the money that people send them and invests in 200 or 300 different companies," with stocks or bonds or both.

"It's an easy way to diversify so your eggs aren't all in one basket," he says. "If one of those firms is Enron, that's not so good, but you may have 299 other companies that you are invested in through your mutual fund so you won't be hurt too much."

Mutual funds are also easier for the common investor who doesn't have time to research hundreds of different companies to decide which are safe investments. When you send your check off to a mutual fund, it's invested by people who spend their entire workday researching companies.

In addition to everything listed above, real estate and commodities such as oil, corn, silver and wheat are considered investments. "Anything that can be bought and sold can be considered an investment," Foster says.

The important thing for any potential investor to do is to invest in many different things -- also known as "diversifying."

"Really one of the most important questions is not what you want to invest in, but how much you want to invest in each and what is your tolerance of risk," Foster says. "Ninety percent of your success in the future in investments is how well you allocate your investments, how much you have in stocks and bonds and mutual funds and CDs."

No matter what you invest in you need to determine how comfortable you'll feel, knowing your money is in those investments. "If the stock market dropped by 20 percent, what would you do? Would you lose sleep or would you take it in stride?" Foster asks.

Research on the Internet and by reading financial magazines such as "Kiplinger's" and "Money," as well as talking to a financial planner are helpful in determining what your "risk tolerance" is.

"You want to maximize your return within your risk tolerance. We ask a battery of questions, such as if the market isn't doing very well, what would you do? Are you more comfortable in common stocks or government guaranteed investments, such as CDs? Some people have a higher risk tolerance because they want to try and get a greater return," Curt Anderson, the managing director of investments at US Bancrop Piper Jaffray in Austin, says. Others, he adds, want something that's safer, even though they may not get as much money than if they put their money in riskier stocks.