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Yeild To Maturity

Yield to Maturity
When purchasing a bond there are so many different factors that come in to play.   One important factor is yield to maturity, “the rate of return anticipated on a bond if it is held until the maturity date” (Investopedia).   This can be very confusing for some people because they don’t understand why they buy a bond at a certain rate, but the yield to maturity date is different.   An example of this is a co-worker bought a 10% bond, but her broker told her that it has a 9% yield to maturity.   The numbers are different because if the bond was purchased at 10% and it was held on to until the maturity date they do not want the customer to get all of their money back.   When the yield to maturity rate is a little bit lower than the bond then the brokers are still making money.  
Yield to maturity is only in affect if the bond is held until the maturity date.   If the bond is cashed in before the maturity date, the customer wont receive that extra.   The brokers are able to tell you how much more money that bond will be worth if cashed in after the maturity date, but they don’t let you know how much you will receive if it is cashed in before.   Some people don’t worry about the extra money that they have been accumulating, but others will wait until they have received as much money as possible.  
Yield to maturity is kind of like a savings account within a bank. Every month interest is being gained on what ever amount of money is in there.   When the money is withdrawn, the amount of interest earned will decrease, but if the money stays in there it will continue to grow when the interest is added in.   The only difference between a savings account and yield to maturity is that with a savings account money can be taken out whenever without losing a lot of money, while yield to maturity is lost when money is taken out.
Yield to maturity is a factor within the bond market, that a broker should take the time to explain the customers.   Customers that do not...