This article discusses the relative advantages of stocks and mutual funds. Here are some considerations. A mutual fund offers a great deal of diversification starting with the very first dollar invested, because a mutual fund may own tens or hundreds of different securities. This diversification helps reduce the risk of loss because even if any one holding tanks, the overall value doesn't drop by much. Small sums of money get you much further in mutual funds than in stocks.
Funds provide a cheap and easy method for reinvesting dividends.
Last but most certainly not least, when you buy a fund you're in essence hiring a professional to manage your money for you. Here are some considerations that will help you judge. Cuts both ways. You can take your profits when you want to and won't inadvertently buy a tax liability. You can do a covered write option strategy.