Reinvestment Risk

Reinvestment risk is the danger that coupons and maturing principal must be reinvested at lower rates than the original investment earned. It's the mirror image of price risk: when yields fall, your bond gains value but your future income drops. Yield to maturity quietly assumes every coupon is reinvested at the same yield, which is why zero-coupon bonds — with nothing to reinvest — are the only clean way to lock a return.