Most investors choose to include some equity, or stock, investments in their portfolio. An investor may choose to buy stock in an individual company, or he or she may choose to invest their money in a fund that invests in a variety of stocks.
Investors typically choose to exchange hard-earned money for stock for the following reasons:

• Diversification, which means that the individual investor's personal portfolio of investments contains a blend of types of stock with the intent of reducing overall risk as compared to owning just one type of stock.
• Higher (potential) returns because over a long periods of time, stocks as an investment vehicle have almost always provided higher returns than other investment alternatives. (Of course, past performance does not always guarantee future results.)
• Improved income through dividend growth as a hedge against inflation.

Stock investing is widely considered a long-term endeavor if it is to be successful, which is why most individual investors turn to stock funds and mutual funds holding stock as a method of investing without the relatively significant management overhead.