Are you a bond trader or a yield farmer?

That question has taken on added significance for investors enticed by Treasury yields at multidecade highs, even if a successful 10-year note auction Wednesday momentarily cooled the feverish market. Answering it confronts investors with some very different considerations than what goes into buying stocks.

An important place to start is to ask why an investor is interested in bonds in the first place. One could make the case for Treasurys today because those high yields mean prices are cheap, while stocks remain historically expensive. That is, essentially, a trading decision.

Or it could be that the income generated by a bond is attractive. It is enough to cover a needed expense over the life of the bond or to induce investors to lock up their rainy day money rather than leaving it in a money-market fund or bank account. That is what a yield farmer is thinking about.

Considering the "why" of bonds can help investors decide exactly how to buy them. Because, unlike when it comes to buying stocks, there is a lot more to consider than whether to go with single issues or an index fund.

Yes, individual bonds can be more complicated than exchange-traded bond funds to buy and sell. But that isn't even the most important difference.

That comes down to bonds' essential feature of maturity. At the end of its life, a bond promises to pay back the principal invested, with interest payments doled out along the way. While a corporate bond might not repay if the company goes bust, a U.S. Treasury is a virtual certainty to deliver on that promise.

By contrast, many popular bond ETFs -- with some key exceptions -- don't have a maturity date. They hold a portfolio of individual bonds and pass along the coupon payments to investors. If bonds in the fund mature, they will repay principal just like any bond. But that goes back into the fund, to roll into new bonds.

Investors can still cash out at any time by selling their shares of the fund. But the thing to know is that they will get the current market price of the bonds currently in the fund, not their original principal.

So, if market yields have risen since they bought in, the price of the bond fund's shares might have gone down. Likewise, if yields have fallen, the price of the fund's shares can rise.

In this way, the returns from a bond fund are uncertain. The yield can move as older bonds mature and new ones come in. The value of the fund can also go up and down. So to predict what the ultimate returns will be, or what the fund's price might be at a future point in time, an investor would have to have a trader's view on the direction of yields and bond prices.

By contrast, owning a bond with no plans to ever sell it before maturity provides a certainty of returns. You know what the interest payments will be, and you know how much money you will get back at maturity.

In many cases, "the trade off between a fund and a single bond is between liquidity and convenience, and certainty of cash flows," said Elisabeth Kashner, director of ETF research and analytics at FactSet.

However, this doesn't mean buying a bond and holding it to maturity in a rising-rate environment is riskless. In a fund, maturing bonds roll into newer ones.

So if yields are rising, maybe because inflation is running hot, the fund's distributions will steadily rise. Over a longer time horizon, that additional income could more than compensate for a fund's loss in price.

Consider, for example, the performance of the iShares 3-7 Year Treasury Bond ETF from October 2020 through this week, a period that included a leap in yields when the Federal Reserve took short-term rates from near zero to above 5%. The fund's price has fallen by about 15% over that period. But its total return, which includes reinvested payouts, is nearly flat.

An individual bond, meanwhile, also bought in 2020 at what would have been a superlow yield, would have provided no such protection. Without reinvesting the interest payments along the way, that bond isn't providing any additional compensation for the fact that the principal, and the coupon payments, could be worth a lot less at the time of maturity.

And, if an investor for some reason decides to cash out before maturity, there is a risk of doing so at a loss. Unless investors can be certain they won't need that money at any time before maturity, or that a bond's income perfectly covers a fixed cost -- also known as asset-liability matching -- they are exposed to the same price risk as fund investors.

"When yields go up, people see that their bond fund prices decline. With a regular bond, they couldn't care less. It's a comforting optic," says Stephen Laipply, global co-head of iShares fixed income ETFs at BlackRock. "In both cases, though, bonds are maturing. The difference is whether that is then rolled into higher yields."

Thinking through these differences and an individual's unique needs and financial circumstances will help investors navigate the sometimes dizzying menu of Treasury options available.

Beyond individual bonds, there are what are known as defined-maturity ETFs. These aim to closely replicate the experience of buying a bond outright by holding the fund's bonds until maturity, then returning that principal to investors. For example, BlackRock offers a series of iBonds ETFs, and Invesco offers BulletShares ETFs, with a range of maturity dates.

ETFs offer portfolios of bonds with varying maturity ranges, say, one to three years. In that case, bonds may be sold before they mature, but the proceeds are still rolled into new bonds. Investors can also buy so-called ladders of individual bonds or defined-maturity ETFs, with staggered maturity dates. There are also Treasury inflation-protected securities, which are bonds whose principal is adjusted to reflect the rate of consumer-price index inflation.

Some investors might be surprised to learn that their objectives fit more with a strategy that isn't just buy-and-hold. Trading isn't always the wrong answer.