Final answer:
The statement is false; buying individual stocks is not necessarily the best investment strategy due to high risk and lack of diversification. Mutual funds and index funds offer a diversified portfolio and professional management, which may be more appropriate for many investors.
Step-by-step explanation:
The statement that purchasing individual stocks is usually the best way to invest in the stock market because the cost to buy stocks is so low is false. It is important to consider the overall risks and the concept of portfolio diversification when investing. While purchasing individual stocks can potentially offer high returns, it also comes with high risk, especially in the short term.
Investors are often advised to diversify their investments across various assets to reduce risk. This can be achieved through mutual funds, which are collections of stocks and/or bonds. Mutual funds offer the benefit of diversification and professional management, which can be especially helpful for investors who may not have the time or expertise to manage individual stocks. Additionally, index funds, which are types of mutual funds designed to track the performance of a market index, offer a way to invest in the stock market with a diversified approach.