The interest rate on a savings bond is usually higher than rates on savings accounts or money market mutual funds. Savings bonds are highly liquid and can be cashed in at any bank in the U.S., not just the bank where you bought them. Good for medium and longer term savings. Although they can be cashed in any time, the maximum interest is obtained by holding them longer. You can purchase a mutual fund through an investment firm, brokerage house, many banks or directly by mail.
Risk varies widely depending on the objectives and policies of the fund.
Funds are not federally insured, but your money is generally safer in a mutual fund than in a few individual common stocks because a mutual fund invests in many different stocks and bonds and thus spreads the risk over many different investments. The return on a mutual fund depends on whether the fund makes good investments. However, the amount of money you can get for the fund depends on its value, and the value changes regularly depending on conditions in the stock and bond markets. A bond is a promise by a corporation to repay the face value of the bond, plus a fixed rate of interest, at a specific future date. Stock represents part ownership of a company.