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Why would anyone buy a government bond?
There are a few other factors possible here: Taxes - Something you don't mention is what are the tax rates on each of those choices.  If the 4% gain is taxed at 33% while the 3% government bond is taxed at 0% then it may well make more sense to have the government bond that makes more money after taxes. Potential changes in rates - Could that 4% rate change at any time?  Yield curves are an idea here to consider where at times they can become inverted where short-term bonds yield more than long-term bonds due to expectations about rates.  Some banks may advertise a special rate for a limited time to try to get more deposits and then change the rate later.  Beware the fine print. Could the bond have some kind of extra feature on it?  For example, in the US there are bonds known as TIPS that while the interest rate may be low, there is a principal adjustment that comes as part of the inflation adjustment that is part how the security is structured.