what's the risk of investing in stocks, bonds or different funds?

[angel]

[Mr. Q]

Funds spread the risk by investing in large pools of various stocks, that you or I could never afford. Thus if a company that they own, or industry goes out of favor, it only comprises a small segment of total portfolio, and risk is minimized. Likewise if a company is suddenly the "in" thing, the fund may only rise a small amount.
Stocks, on the other hand, will rise and fall with market conditions. You may make a fortune, or lose it.
Bonds are safe instruments in that their interest rate is fixed like in a bank CD. But the actual cost of the bond will rise or fall with interest rates also.

[AL]

The risk is losing your money. Each different type of investment has it's own risk versus rewards. Usually if the risk is higher, the reward is higher. That is why you don't see people getting rich leaving their money in the bank. The money kept in the bank seems to be safe - you don't lose principal, and you get very low returns. However, inflation will get you in the end and you will go broke safely.

Mutual funds will spread your investment over many stocks or bonds versus just one company. This makes it easier to diversify your investment. You just have to select the right mutual fund manager.