Answer:
investing in individual stocks can be risky if you do not invest in a relatively large number of different stocks, because you need diversification in order to help limit your risk.
Step-by-step explanation:
In general "putting all your eggs into one basket" can be a risky proposition. If you only have enough money to invest in one stock then if that stock goes down in value, your entire investment goes down by the same amount. However, if you are able to invest in multiple, diversified stocks - that is, stocks for companies that operate in varying fields or businesses - when one stock goes down in value it's possible/likely other(s) will not and may go up in value. Since mutual funds exist, and mutual funds that invest in stocks do so by investing in multiple stocks, you are able to reduce your risk by purchasing a mutual fund. Each and every share in a mutual fund spreads your investment across multiple stocks for you. Many investors just don't have enough money to invest in enough individual stocks to diversify their portfolio.