For metal cutting tools you can probably get by with a fine wheel on the grinder, coupled with a soft and a hard Arkansas stones. Use a honing oil for lubrication. You can later round out the stones with a surgical black or surgical white stone if you plan to also do plane irons, chisels and knives. Some say the whites are finer than the black. Arkansas stones are mined in Arkansas and have more of a polishing action than cutting. They hold their flatness well, but there is no good relationship between grade and grit size
The water Stone people are forever arguing with the arkansas people. Water stones aren't really suitable for tool bits because of the need to develop the slurry. They also require frequent truing because they wear quickly. They do do a right fine job on wood cutting tools and knives once you have the knack. Grit sizes range from 220 to 8000.
I have arkansas stones, but mostly use the scary sharp system. This is the wet/dry paper on a flat surface method. For crude work, using a film of water between the paper and stone will suffice. The guys doing precision woodwork (accuracy to 0.001) use a low tack spray adhesive. Grit size goes from gravel to 2000. I use 220 for most lathe bits and down to 2000 on my block planes. I finish the plane irons and chisels on a razor hone, about 14000 grit equivalent. My franz swaty hone is purported to be a ceramic composition.
I do have a fine diamond hone that I use to touch up my cut off tools. I can touch them up without removing them from the holder.
Now for carbide sharpening, diamond is the only way to go,