Bond Maturity

A bond 's maturity is the date at which the bond repays the principal and any remaining interests in full. Bond mutual funds and bonds can be classified according to the bond maturity date.

The maturity of a bond can be any time short term or long term. The maturity date of a bond can be divided into: Short term bond maturity Bonds with short term maturity are sometimes called limited term bonds or bond funds. The bond maturity of these bonds are often between 1-4 years.

T-bills are examples of bonds with short term maturity. Bonds with very short term maturities also exist with maturity dates of less than one year. These very short term bonds are also called temporary investments and include certificates of deposit, money marketing funds, and other forms of savings accounts.

Intermediate term bond maturity

Bonds with intermediate term maturity often mature between 4-10 years. T-notes are examples of bonds with intermediate term maturity.

Long term bond maturity

Bonds with long term maturity often mature in more than 10 years. Examples of bonds with very long term maturity are t-bonds.

Investing in bonds with different maturity dates

In general it is good to invest in bonds with varying maturity dates in your bond portfolio. Different maturities as well as different bond ratings will ensure diversification and lowering risks of your bond portfolio. Bonds with long term maturity dates often carry higher risks but also higher yields whereas bonds with near maturity dates carry low risks and low returns. By having all types of maturity dates in your bond portfolio can lower your risks while increasing yields and returns.