What are liquid assets?

Liquid assets are financial instruments or assets that can be quickly and easily converted into cash without significantly affecting their market value. This includes things like cash itself, money market accounts, stocks, and bonds that can be sold quickly in the market. The ability to access cash rapidly is crucial for businesses and individuals, especially in situations where they need to meet short-term obligations or emergencies.

In contrast, other asset types, such as real estate or long-term investments, are not considered liquid because they may take time to sell and often require a significant process to convert them into cash. Assets that cannot be easily sold are clearly not liquid, as they may take considerable time or may involve discounts on their value during the selling process. Understanding the nature of these assets helps in making informed financial decisions and assessing a person's or company's overall liquidity and financial health.