Yield Curve - Should you buy short-term, medium-term or long-term bonds

An important concept for you to grasp as a first-time bond investor is the yield curve. In most economic climates, the longer you are willing to tie up your money, the higher the yield you can earn.

This is similar to a car loan or home loan: If you want to borrow money for 2 years, the annual rate you will pay will be lower than if you wanted to borrow money for 10 years. As a lender, which is what you are as a bondholder, you will generally get the benefit of higher yields with longer maturities.

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