Maturity is the term used to describe the length or the duration of your investments. Many investments are made to be held over a certain period of time. An investment that is held for its full duration is said to have been held to maturity. When an investment has reached its maturity, the original investment and any gains or losses earned by the investment are returned to the investor.
The maturities of your investments should occur so that the surplus cash is available when your business needs it. Preparing a cash flow budget is the best way for you to determine the appropriate maturities for your investments in light of your future cash inflows and outflows. As a rule, you should try to stagger the maturities of your investments so that investments mature periodically. Investments that mature at a time when your business does not require the surplus cash can always be easily reinvested.
The maturity of your investments has a direct impact on the yield
of your investment. A longer maturity will generally provide you with a higher
yield. On the other hand, an investment with a shorter maturity or no maturity
at all will result in a lower yield on your investment.