How finance folk use it
Maturity is the end of an investment’s life. For time deposits and treasury notes, it is when you’re paid back what you invested plus interest. For bonds, it’s when you get back the amount you originally invested, and you stop getting coupons.
Is it good or bad?
Maturity is a good thing for you because this is when you get back what you invested plus the interest it’s earned.
However, there is always the small risk that you will not get your money back. Why? This is called the default risk or credit risk, which refers to when your time deposit, treasury note, or bond matures but you don’t get paid. And that’s bad. The likelihood of a default risk happening depends on whether the institution you have invested in is paying back debts.
What it means for you
When an investment matures, it is also the time that you reap the benefits and get your money back. It is also presents an opportunity for you to reinvest to take advantage of compound interest. Remember, though, that not all investments have maturities. For investments like stocks, unit investment trust funds (UITFs) and mutual funds, you get to choose when you want to withdraw. That’s why these are called open-ended investments.
