Between bonds and mutual funds, which one is your favorite investment tool? For me, bonds are better investment tools because they pose less risk. In fact, if you invest in government, there is zero percent risk. However, when it comes to profitability, mutual funds are better. In our country, some mutual funds can give you as much as 20 percent profits, whereas the maximum returns you can get with bonds is 12-13 percent. Even though I like to diversify my investments with high risk investments and low risk investments., given a choice, I will always go with bonds. What about you?