Why is investing in the stock market riskier than saving cash or bond investments? Describe one way to mitigate, or lessen, that risk.

Risks associated with a stock market were discussed and ways to mitigate those risks were also discussed.

What is a stock market?

Stock markets are venues where buyers and sellers meet to exchange equity shares of public corporations.

Investing in the stock market is riskier than saving cash or bond investments because the stock market completely depends on the performances of corporations. If the performance of a company is not good, each and every shareholder has to bear the consequences.

The way to mitigate this risk is to study the past performances of a company and to know to the current status of that company, its relations with other companies, market demands etc.

Hence, Risks associated with a stock market were discussed and ways to mitigate those risks were also discussed.

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If the company performs badly, or there's a perception it does so, then the stock's value will go down and you'll lose money. The only way to earn money from stocks is if the company is able to be innovative and survive the competition. The worst case scenario is that you lose all your money if the company goes bankrupt.

To reduce the risk, you should diversify your investments so that you invest in multiple companies along multiple sectors of the economy. This spreads out the risk so that if one company fails, then its unlikely they all fail (assuming there isn't some catastrophic event in the market). Alternatively, you can invest with mutual funds or index funds to let other people/entities invest your money with a range of diverse companies.