The Smart Investors

While both bonds and fixed deposits provide safety, bonds provide greater flexibility and better returns, while fixed deposits are relatively simpler and safer. Fixed deposits give a fixed rate of interest, while bonds are a little risky but might give greater returns as compared to FDs over the long period of time. The one you choose is really dependent on your risk appetite and your investment goals.

Generally, bonds allow liquidity and varieties while fixed deposits are much simpler. Fixed deposits are better where one just wants to park his or her money and have some steady interest without bothering about fluctuations in the market. But one can think that bonds are the better option if they are ready to take some well-thought-out risk for more returns.

Personally, I see fixed deposits as "set and forget" options, whereas bonds need more active monitoring because of price changes and credit risk. A beginner or someone who values safety will find FDs much easier to comprehend, where as an experience investor who wants diversification can find bonds very useful and can provide a lot of opportunities