mutual fund investment
Investing in just a handful of stocks can leave you exposed to what is called "overconcentration." When one or two stocks that represent a sizable portion of your savings decline, it can have an undue influence on your investment performance. Mutual funds help provide instant diversification since they invest across dozens or sometimes hundreds of individual stocks, bonds, or other securities.
Further, history shows that large groups of stocks tend to ride out market volatility better than individual stocks. For example, when the market is volatile, one poor performing stock may be smoothed out by other stocks that are performing well in the same index, which may help reduce the risk to your overall portfolio than if you were invested in only one stock.
Further, history shows that large groups of stocks tend to ride out market volatility better than individual stocks. For example, when the market is volatile, one poor performing stock may be smoothed out by other stocks that are performing well in the same index, which may help reduce the risk to your overall portfolio than if you were invested in only one stock.
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