Liquidity
Liquidity describes how easily an asset can be converted into cash without significantly affecting its price.
1 min read Learning to Invest
What it means
Liquidity describes how easily an asset can be converted into cash without significantly affecting its price. Some assets can be sold quickly, while others may take weeks or months.
Example
Listed shares are generally much more liquid than property.
Why it matters
Liquidity matters if you may need access to your money at short notice.
Less liquid investments sometimes offer higher potential returns in exchange for reduced flexibility.
Can something be valuable but illiquid?
Yes. An asset can be worth a lot but still take a long time to sell.