Final answer:
A financial advisor or mutual fund helps individuals select securities for their portfolios, enabling them to diversify and reduce risk. Mutual funds consist of various securities, which mitigates the potential impact of any single company's performance on the investor's portfolio.
Step-by-step explanation:
A financial advisor or a mutual fund assists individuals in selecting the securities that they might want to add to their securities portfolios. Someone looking to purchase stocks can buy them through various online platforms, and brokers, or can opt for mutual funds. Mutual funds are organizations that buy a range of stocks or bonds from different companies, making it easier for investors to achieve diversification. This is recommended because investing in a single company can be risky due to unpredictable market conditions or managerial decisions. By diversifying, investors spread their risk across a variety of securities, which can mitigate the impact of any single security's poor performance.
In 2021, according to the Investment Company Factbook, just over 47% of U.S. households had a financial investment in a mutual fund. This includes those who have their retirement savings or pension money invested in mutual funds, signifying their importance as a tool for financial security and growth.