heldtomaturity

Held to maturity refers to an investment strategy where an investor buys a debt security, such as a bond, and intends to hold it until its expiration date, known as the maturity date. The primary goal of this strategy is to receive the full face value of the bond back, along with all scheduled interest payments, without selling the bond before it matures. Investors who employ a held-to-maturity strategy are typically less concerned with short-term price fluctuations of the security. They prioritize the predictable income stream and the return of principal at maturity. This strategy is often favored by conservative investors or institutions with predictable cash flow needs. If a bond is sold before maturity, the investor might realize a capital gain or loss depending on market interest rates at the time of sale. However, by holding to maturity, these potential gains or losses are avoided, and the investor is assured of receiving the original investment amount back, assuming the issuer does not default. Accounting rules treat held-to-maturity securities differently than those intended for sale, impacting how they are reported on financial statements.