The chart below gives you a quick, convenient way to compare the benefits of various fixed-income products. In general, bonds and bond funds offer more income potential than money market funds and CDs, but also carry a greater risk of principal loss.
| Bond Funds | Individual Bonds | Money Market Funds | CDs | |
| Income Potential | Dividends paid at pre-determined intervals in variable amounts | Periodic payments at fixed amounts | Dividends paid at pre-determined intervals in variable amounts | Fixed payment usually at maturity; interest crediting and compounding during term can increase income potential |
| Capital Growth Potential | Potential for capital appreciation | Potential for capital appreciation | None | None |
| Flexibility | Buy or sell daily at current NAV; checkwriting available on most T. Rowe Price bond funds |
Buy or sell at any time on secondary market at current market value | Buy or sell daily; checkwriting available on all T. Rowe Price money market funds |
CDs opened directly with bank may impose penalty for early withdrawal; CDs purchased on secondary market offer opportunity to sell at current market value without penalty |
| Stability | Principal value will fluctuate | Principal value will fluctuate prior to maturity; principal returned at maturity; subject to credit worthiness of issuer | Principal value typically stable | Principal returned at maturity and covered to FDIC insurance limits2 |
| Fees or Expense Ratio/Minimums |
0.30%-1.51% per year1 |
Brokerage commissions and fees apply |
0.45%-0.63% per year1 |
No fees for most CD accounts opened directly with bank; commissions and fees may apply for CDs purchased through brokerage account |
| Investment Minimums | $2,500-$25,000 minimum1 | Generally $1,000 minimums; $5,000 for municipal securities | $2,500-$25,000 minimum1 | Generally $1,000 minimum |
Protection, such as FDIC or SIPC insurance, largely depends on where you hold your assets. The chart below shows you what types of assets are insured based on where they are purchased.
| Purchased directly from T. Rowe Price |
Purchased through a T. Rowe Price Brokerage account | Account opened with T. Rowe Price Savings Bank | |||||
| Bond Funds |
Money Funds | Individual Bonds | Bond Funds |
Money Funds | CDs | CDs | |
| FDIC2 | No | No | No | No | No | Yes | Yes |
| SIPC3 | No | No | Yes | Yes | Yes | Yes | No |
1 Investment minimums and expense ratio ranges are for. T. Rowe Price fund's. Expense ratios are as of each funds fiscal year end and will vary over time.
2 The Federal Deposit Insurance Corporation (FDIC) basic deposit insurance coverage had been temporarily increased from $100,000 to $250,000 per depositor through December 31, 2013. With passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the $250,000 insurance limit has been made permanent. Please note that there is separate $250,000 coverage per depositor for certain retirement accounts (like Traditional and Roth IRAs).
3 Brokerage accounts are covered by SIPC, which protects security customers of its members for up to $500,000 (limit of $250,000 for cash claims).
Note that an investment in a money market fund is not insured or guaranteed by the FDIC or any other government agency. Although a money market fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in a money market fund.
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