Table of Contents

What Investments Are Considered Liquid Assets?

By

澳洲幸运5开奖号码历史查询:Steven Nickolas

Updated October 14, 2024

Reviewed by

Samantha Silberstein

Fact checked by

Katrina Munichiello

A liquid asset is an asset that can be 澳洲幸运5开奖号码历史查询:readily converted to cash🍎. This means the asset can eas♎ily be sold with little impact on its value.

Several factors ꧑must be present for an as✃set to be considered liquid. It must be an item in an established market with a large number of interested buyers. Ownership must be easily transferred.

Cash on hand is considered to be a liquid asset because it can be r✅eadily accessed. The money in your checking account, ♚savings account, or money market account is considered liquid because it can be withdrawn easily to settle liabilities.

Key Takeaways

A liquid asset is either available cash or an instrument that can easily be converted to cash.
Liquid assets are perceived as being essentially identical to cash because they don't lose value when they're sold.
A cash equivalent is an investment with a short-term maturity such as stocks, bonds, and mutual funds that can be quickly converted to cash.
Liquid assets differ from non-liquid assets such as vehicles or jewelry, which can take longer to sell. They may also be sold for less than their true value.

Cash Equivalents

Cash equꦏivalents are typically investments that have short-term maturities of less than 90 days. Examples of cash equivalents include:

Stocks and marketable securities that can be converted to cash in a relatively short period in the event of a financial emergency
澳洲幸运5开奖号码历史查询:U.S. Treasuries and bonds
澳洲幸运5开奖号码历史查询:Mutual funds in which money from various investors is pooled and invested in a variety of financial securities including stocks and bonds
澳洲幸运5开奖号码历史查询:Money market funds, a type of mutual fund that invests in low-risk, low-yielding investments such as municipal bonds

Liquid ass🍸ets are used by both b♊usinesses and consumers.

Note

Investors can buy shares of a m🔜utual fund rather than purchase shares of an individual stock. These transactions are executed by the fund manager or through a broker rather than on an open market.

Non-Liquid Assets

Non-liquid assets are those that can be difficult to liquidate quickly. Land and 澳洲幸运5开奖号码历史查询:real estate investments are considered to be non-liquid assets be💝cause it ꧒can take months or more for an individual or a company to receive cash from the sale.

Suppose a company owns real estate and wants to 澳洲幸运5开奖号码历史查询:liquidate it because it has to pay off a debt obligation within a month. The process of selling the real estate may take longer than a month because it🌄 will take time to find a buyer, negotiate and agree on a price, and set up the closing for the sale.

The property might sell for a lesser price than its current market value if the company wants to sell th꧟e property quickly, or itꦬ could sell for a loss.

Liquid asseꦺts can easily be sold for cash and have a stable market price. Non-liquid assets cannot be sold quickly for cash and prices can be much more vo꧂latile.

How Do I Liquidate Stocks?

Selling stocks and other securities can be as easy as clicking your computer mouse. You don't have to sell them yourself. You must have signed on with a brokerage or investment firm to buy them in the first place. You can simply notify the broker-dealer or firm that you now wish to sell. You can typically do this online or via an app. Or you could make a phone call to ask how to proceed. Your brokerage or investment firm will take it from there. You should have your money in hand shortly.

How Long Does It Typically Take to Sell a Home?

The U.S. Census Bureau and the U.S. Department of Housing and Urban Development released a report in August 2024 indicating that residential properties spent 2.5 median months on the market in 2023, increasing from 1.9 median months in 2022. There were seasonal variations: for example, it ranged between a median 2.2 months and 2.4 months between April and August 2024, vs. 2.5 months to 2.8 months between October 2023 and March 2024. The term "median" means that half of all residences took longer than this to sell and half sold in less time.

This data is based on new home sales but it nonetheless gives some perimeters to your expectations. Your best option is likely to hire a qualified r🎶eal estate professional to get your property sold. There are various steps you can take and concessions you can make to hasten the process along.

What Is Liquidity Risk?

Liquidity risk is a term that applies to financial institutions rather than individuals. It measures a firm's ability to meet its monetary and contractual obligations without suffering economic hardship. Most firms have management teams in place to monitor cash flow and to ensure that this risk doesn't occur.

The Bottom Line

A liquid asset can be sold quickly, and its value doesn't drop when converted to cash. Examples include cash and its near equivalents, such as stocks and bonds. An illiquid asset, on the other hand, is the opposite, such as real estate, art, and antiques.

Article Sources

Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.

U.S. Census Bureau. "," Page 5.

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