The risk is very low. But the return also is low and may not beat inflation. Money market investments are typically viewed as short-term investments. They are not generally recommended as investments for 100 percent of your retirement money unless the investor is very close to retirement age. Money market portfolios are neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Bonds represent the debt issued by governments and corporations.
They are agreements to repay the debt at a set rate of interest in a predetermined period of time. The risk involved with bonds varies depending on who is issuing them. Bonds are generally considered a less risky option than stocks, but more risky than money market investments. Bonds are more sensitive to interest rate fluctuations than stocks. Most bond funds will have a mix of high quality bonds, like those issued by the U.S. government and blue-chip companies that pay lower rates of interest, and lower quality bonds that pay a higher rate of interest.