By: DanielXX There are several premiums that can be reaped which appeal to the investor. A key one among these is the time horizon premium. This is nothing new in the investment world. Those willing to put their money in fixed deposits with long maturities can get better rates than for say, checking accounts. For bonds, typically the yield (interest rate) rises with increasing time maturity. The difference in yields between long and short-term instruments is to compensate investors for having their money committed for longer periods. There are risks with having excessively long-term horizons. One of these is opportunity cost of better alternative investments. The second is liquidity mismanagement. Some might have become familiar with the structured investment vehicles, or SIVs, that have run into problems recently. These SIVs typically borrow short-term money to invest in long-term bonds and other instruments to take advantage of the higher yields. Now they find that it is difficult to roll over their short-term debt, and hence face the prospect of having to dispose of their long-term investments at firesale prices. Read more... Related Articles: How To Make Money In Stocks Part 1: Back to the Basics