Deeeepends....

> How exactly does investing in government bonds or bank cd's work and which
> one gives a better return on money invested? Which one is more stable?

I'm taking a retirement seminar class, which goes over this in great detail (BTW, I recommend to folks that they take a class like this. Usually it'll run several weeks, is presented by a local acounting firm of some type, and yes they want you to buy their services but they'll walk you through a financial review and go into great detail about what kinds of investments are better for you when.

And, actually, your bank can give you good advice on this. Take about an hour and talk to one of the investment officers -- they should have financial calculating software right at hand and can whip out the various scenarios for you.

Basically, both are safe investments. There's a couple of questions to ask and one of them is "how long do you want to tie up your money and how much do you have?" CDs are shorter term and often cheaper (unless you're talking about savings bonds.)

I'm going to dither here... if you're confused, it's because this really is a fairly big and complex topic and I'm not a financial planner.

Things to consider:
* who will this money be for (a grandkid, kid, yourself?) and what purpose is it for (inheritance, education, retirement)? You can buy special funds (like a Roth IRA) that are tax-deferred. Ask your bank about these.
* how much can you tie up? Sometimes a money market fund is better.
* if this is for retirement, talk to a retirement planner. You have to make allowances for inflation and a lot of other things (basically, your income will have to triple in retirement to keep up with inflation (assuming a 30-40 year lifespan after you retire.)

Anyway, sorry to dither. You've asked an excellent question and a very deep one -- and the tax laws vary from state to state and country to country. Talk to your bank as a first step... they're free and you can take the plans home and mull them over before taking any steps.