What is Liquidity

We heard a lot about liquidity in the news or when we review about company and its stock.

So what is liquidity?

Liquidity is refering to how fast you are able to convert your assest into cash.

Usually people will use high or low liquidity as a reference to identify , the higher the liquidity is the faster this assest can be converted.

Example of high liquidity is your bank savings and fixed deposit; you can take it out anytime without penalty

Medium liquidity is like your stock, why I put this as medium because you can't get directly your money, you need to wait at least 3 days for the settlement and you cant just sell it anytime because of it's depend on the current stock market price and at what price you bought it.

Low liquidity is like your properties, HDB, Condo, jewerly which may take a while if you want to convert it to cash. You need to find a buyer or agent, you need to go through documentation and long
processes before you get your money and usually takes weeks even months and also put in the factor called loss in the picture if you sell not at your buy price.

So don't buy assest with only a low liquidity even low liquidity assets usually comes with higher return.

You never know when you will need the money for emergency or even to buy stocks when rare opportunity arrise such as economy dip.

Talking about liquidity, liquid ... Make sure you drink enough water everyday for the sake of your kidney and health.