Why might a small investor be interested in buying a mutual fund as opposed to stock in an individual company?

What will be an ideal response?

By buying shares in a mutual fund, small investors reduce the costs they would pay to buy many individual stocks and bonds. Small savers who have only enough money to buy a few individual stocks and bonds can use mutual funds to diversify, which lowers their investment risk because most mutual funds hold a large number of stocks and bonds. If a firm issuing a stock or bond declares bankruptcy, causing the stock or bond to lose all of its value, the effect on a mutual fund's portfolio is likely to be small. The effect might be devastating, though, to a small investor who invested most of his or her savings in the stock or bond. Because mutual funds are willing to buy back their shares at any time, they also provide savers with easy access to their money.