Skip to content
- Liquidity implies how quickly an asset can be converted into cash at market price.
- High liquidity enables one to meet financial commitments very quickly.
- Low liquidity arises when money remains invested in non-liquid assets.
- Liquid mutual funds can be conveniently redeemed at short notice.
- Illiquid assets like real estate and cars cannot be easily converted into cash at fair market value quickly.
- Maintaining an adequate emergency fund is important to cover expenses for a minimum period of 3 to 6 months.
- Key to financial discipline is to hold a part of overall net worth in liquid assets.
