Wild Rollercoaster

For those that look at the stock, they know that there are many ups and downs. Some days the Dow Jones industrial average will climb up 800pionts and other days they plummeted in a downward deep dive. Some people say that bonds are better and safer bet. However when one looks at bonds they also go up and down every day.
Now instead of looking at them every day or hour we pull the timeline back to multiple years. What you'll see is more of a steady line moving up. The reason for that is because when we invest in stocks, we're investing in business and the people who run them. That being said if one invests in a single stock, their whole hope is on that one business and the people who run it. This is extremely risky. For this reason it is recommended to diversify their portfolio. Some tools that help to diversify are index and mutual funds. Basically in these types of funds the investor is investing in an entire group of businesses. For an example the Standard and Poors 500 index fund (S&P500) is an index fund that measures the growth of Americans top 500 companies. There might be one company that does really poorly one day however and hopefully the other 499 will be doing well.