If you want greater interest rates in shorter span of time then a short term bond fund may meet your needs. A bond fund pools cash from multiple investors to buy individual bonds that meet

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the fund’s investment purpose. Each bond fund is efficiently handled, and is grouped based on the nature of bonds in which it invests. A usual short term bond fund invests in bonds that will mature in one year to three years.

A short term bond offers a greater potential interest than a money market fund but it carries more risk. When you own a bond or note from a credit-worthy issuer yourself, you will ultimately get the principal plus interest rate you contracted for if you hold the bond or note until it is due. Investing in a bond fund does not work the same way.

If more investors are withdrawing money from the fund rather than investing, the fund managers would then sell bonds in the fund even if it is not feasible to do so. The net asset value (NAV) of a share in a short-term bond fund can vary depending on the value of the bonds possessed by the fund. Shares in short term bond funds tend to fluctuate less than shares in long term bond funds but even in a short term bond fund there is no assurance that you will get back no less than the amount of money you invested into the fund.

Bond funds are subject to interest rate risk which is the risk that the market value of the bonds owned by a fund will differ as interest rates go bearish or bullish. Bond funds are also subject to credit risk which is the risk that the bond issuer may default on its obligation to pay the bondholders. They are subject to prepayment risk which is the risk that the issuers of the bonds owned by a fund will prepay them at a time when interest rates have declined.