Stock investment comes with significant risk that an investor should be aware of. Especially in the short term, stocks are prone to high volatility due to dynamic market conditions. In the long term, historically, stocks have given significant returns. However, they do not guarantee returns. Over the years, there were many highs and lows in the stock market. Therefore, investors need to be cautious while investing in stocks. Only investors with high-risk tolerance can consider investing in stocks. There are other investment avenues where one can invest based on their investment horizon and risk levels. For example, mutual funds offer good diversification. Mutual funds invest in multiple stocks and professionals manage them. Therefore, these eliminate the risk of exposure to just one stock. However, these are not risk-free investments and also do not guarantee returns.