At best, picking stocks is an educated guess, and you take all the risk. If the stock price does go up as you anticipated, you can sell your stock for a profit. If it doesn't, you may have to sell at a loss. Generally, unless you have the money to buy a number of different stocks, and the time to monitor your investments, trading on the stock market probably is not for you. You may want to consult a financial advisor or broker for further information.
Mutual funds offer the potential benefits of stocks and bonds, usually with less risk.
With mutual funds, your money is pooled with that of other investors in a fund run by a professional money manager. The risk can be reduced because the fund owns far more diversified stocks and bonds than an average individual investor could hold. Therefore, the effects of a poor performance by any one holding can be diluted. Keep in mind, however, that neither the profits nor your principal is guaranteed. In addition, you may be paying management fees and perhaps a sales commission, called a load , on the money you invest.