What is the maturity range for short-term bonds?

Short-term bonds typically have a maturity range of up to 5 years. They are generally issued by governments or corporations to meet short-term financing needs. Investors are attracted to short-term bonds due to their lower interest rate risk compared to longer-term bonds; when interest rates fluctuate, the prices of bonds with longer maturities tend to be more volatile.

While some definitions can slightly vary, the common understanding in the investment community categorizes bonds with maturities of less than 5 years as short-term. Therefore, stating a maturity range of 0 to 7 years can be misleading because it includes bonds that are often classified as medium-term.

In this context, defining short-term as up to 5 years aligns well with market practices, particularly for managing liquidity needs and reducing risk. Thus, the correct understanding focuses on the conventional 0 to 5 years range for short-term bonds, making that distinction important for investors and financial professionals engaging in bond markets.