Describe how investing in a fund is a more diversified approach than investing in a single stock or bond.

Question: Describe how investing in a fund is a more diversified approach than investing in a single stock or bond.

Investing in a fund is like putting your eggs in many baskets instead of just one. Funds pool money from multiple investors to buy a diverse mix of stocks, bonds, or other assets. This reduces risk because even if one investment performs poorly, others may do well and balance it out. In contrast, investing in a single stock or bond ties your fortune to the success or failure of that one asset, which can be risky if it underperforms. Diversification in funds helps spread risk and potentially enhances returns over time.

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