Mutual Funds Vs. Treasury Bonds
Treasury bonds offer security, a set rate of return--even if it is low--and minimal need to manage them. Mutual funds are not secured, don't have a set rate of return and require competent managers.
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Treasury Bonds Safety
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One of the safest---but still not risk free---financial investments are treasury bonds. They are backed by the credit and full faith of the United States Government.
Mutual Funds Safety
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Mutual funds do not enjoy the backing of the U.S. Government or any insurance agency. And they are not insured by the FDIC either.
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Rate of Return
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Bonds experience smaller rates of return than mutual funds, generally. However, if a mutual fund is composed of poor-performing stocks and bonds or is made up of companies that are not financially profitable---or well run---then a bond could outperform a mutual fund.
Investment Period Length
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Treasury bonds (also known as a T-bond) is a long-term investment vehicle (some as long as ten years), with a fixed interest rate. Mutual funds can be short-term (as little as a week) or long-term investments (generally two to five years), and the interest rate can fluctuate with the market.
Fees
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Although mutual fund investors can incur selling and management fees--except for no-load funds--when they purchase, trade or sell their shares, individuals who purchase treasury bonds do not. This is because treasury bonds are kept for long periods of time because their interest rate and return are guaranteed.
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