Which is safer, bonds or money funds?
There is no fixed answer as to which is safer, bonds or money funds. The risk of bonds is related to the type of bonds selected. Generally speaking, bonds with high credit rating such as national debt are safer than money funds, but if you invest in corporate bonds with low credit rating, the risk is higher than money funds. As a financial product with fixed income, bonds have relatively stable principal and interest income. When buying bonds, investors need to know the credit rating of bonds and the repayment ability of issuers, so as to determine the default risk of bonds. Generally speaking, bonds with higher ratings have less default risk, but relatively low returns, while bonds with lower ratings have higher interest rates, but there is default risk. Money fund is an open-end fund with money market instruments as the investment target, including short-term national debt, bank deposits, commercial paper and so on. The income of the money fund is relatively stable, but there is also the risk of a decline in net value.
How to choose?
How to choose bonds and money funds needs to be combined with investors' own situation. Investors should consider liquidity, risk tolerance and expected returns when choosing bonds and money funds. If short-term savings have liquidity requirements, it is recommended to choose a money fund. If it is a medium-and long-term investment, you can consider buying bonds. If the risk tolerance is relatively low and you don't want to bear the risk of loss, you can choose bonds with high credit rating, such as government bonds and bank bonds. If you can bear some loss risks, you can choose money funds or other high-yield bonds. When choosing bonds, investors should pay attention to the varieties with good credit and liquidity, and pay attention to the interest rate and term of bonds. When choosing money funds, we should choose products with large scale and good historical performance.