Question

Why is it important for people who own stocks and bonds to diversify their holdings? Discuss?

Answer 1

anss...
Holding a single company's of stock or bond is very risky. Holding a diversified stocks and bonds reduced risk because people who holds diversified stocks and bonds have only a small stake in each company.
Mutual fund makes diversification easier If a person prefers more safety but still want to invest in the stock market, he/she should choose a good mutual fund for investment. If it is a well managed fund it should give you good returns over the long term.