Some people do not think that they know enough about the stock market to pick out individual stocks for themselves to invest in. Instead they prefer to basically invest in the market as a whole, so that they are diversified and do not have to research individual companies. This causes their money to rise or fall with the market as a whole.
There is one other issue to investing in the market as a whole; lack of money. If the small time investor does not have enough money to invest in dozens of stocks in one single time makes it difficult for them to invest in the market as a whole. However, there is a way around this, and it is known as index investing.
This form of investing is a method whereby the investor puts their money into one investment vehicle (such as an ETF) that matches the returns of the index of their choice. If for example the investor wants to invest their money in the S&P 500 (the broadest index of the market), then they can put it into an S&P 500 index ETF. This fund will then take their money and spread it around the entire index.
Therefore, you will owe tiny pieces of every company within the S&P 500. These index funds are available for any of the major indexes, and several of the minor ones as well. A certain index might have a different focus then another one, so carefully consider which index you want to place your money in. Based on the three major indexes, you might choose the Dow Jones if you are a low risk investor, the S&P 500 if you are a medium risk investor, and Nasdaq if you are more interested in high risk.
Regardless of which index you choose, you will still be playing it safer than investing in single stocks.