Maturity.

In plain English

Maturity is the date a bond, certificate of deposit, or similar fixed-term investment comes due. On that date the issuer repays the principal, the original amount you lent, along with any final interest. Until maturity you collect the agreed interest payments. A bond described as a 10-year bond matures 10 years after it is issued. Shorter maturities generally carry less interest-rate risk; longer maturities usually pay more to compensate for tying up your money.

01Why it matters

Maturity tells you when you get your cash back and how exposed you are to interest-rate swings in the meantime. If you need the money on a specific date, matching the maturity to that date removes guesswork. If you sell before maturity, you take whatever the market will pay that day, which can be more or less than face value.

02The math, step by step

You buy a $1,000 Treasury note with a 10-year maturity paying 4 percent a year. Each year you receive $40 in interest. At the end of year 10, on the maturity date, you get your $1,000 principal back. Total interest over the life of the note is about $400 if you hold it the whole way.

Illustrative example. The amounts here are hypothetical, chosen to show how the math works, not real quoted rates or figures.

03What this is NOT