Any liquid asset that can be converted into cash in less than a year can be considered a liquid investment. Check the examples of liquid investments in the post.
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Liquid investments can be easily converted to cash. They are also referred as quick assets. Examples of liquid investments are cash, bank deposits, government securities, bonds, money market mutual funds and short-term stock funds.
Liquid assets are always available for use during an emergency. Liquid investments are also known as ready cash or cash equivalents.
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What are illiquid investments?
Illiquid investments are not easily converted to cash. They are also referred as slow assets or hard assets. Examples of illiquid investments are real estate property, stocks, gold, farm land, and long-term government bonds.
Illiquid assets are not available for use during an emergency. Moreover, illiquid assets can be used only after selling them in the market.
Illiquid investments are also known as hard assets or fixed assets.
What are hybrid assets?
Some of the illiquid assets can be converted to cash. These are known as hybrid assets. Examples of hybrid assets are property, stocks, bonds, and mutual funds.
Hybrid assets are also known as semi-liquid assets.
Key Differences Between Liquid Assets and Illiquid Assets
The key differences between liquid assets and illiquid assets are: Liquid assets are easily converted to cash and can be used during emergency. Illiquid assets are not easily converted to cash and cannot be used during an emergency.
Liquid assets are also known as quick assets.
Illiquid assets are also known as slow assets.
Liquid assets include cash, bank deposits, government securities, bonds, money market mutual funds and short-term stock funds.
Illiquid assets include real estate property, stocks, gold, farm land, and long-term government bonds.
Liquid assets are ready cash or cash equivalents.
Illiquid assets are hard assets or fixed assets. Some of the illiquid assets are converted to cash. These are known as hybrid assets.
Why do we invest in Liquid Investments?
As an investor you should look to invest your money in such a way that any savings or wealth that you have created over a period of time can be easily accessed.
In the long run, you may want to find a way to let your money work and keep up with inflation and therefore a liquid investment might be a preferred choice.
What are the different types of Liquid Investments?
There are many different types of liquid investments available in the market for investors to pick from.
Cash
One of the most common types of these investments is cash. This is a very safe but also a very slow way to invest as it does not allow your money to grow much over a period of time.
Mutual Funds
Another form of liquid investments is money market mutual funds. These are sort of like mutual funds, but they are designed to be more liquid. This means that your money can be easily accessed at any time.
You can find a money market fund with a variety of interest rates. These funds are usually very liquid. These are very safe investments which allow your money to grow and are great for short term investments.
Short-Term Bonds
A third option is to invest in short-term bonds. These are very safe investments, but they are not very liquid. They are a great way to keep your money safe. If you invest in these, you want to make sure that you have a solid investment plan in place, and that you are not going to need access to your money for a long period of time.
CDs
You can also find CDs that are liquid.
These are also a safe way to invest your money. They are safe investments, but they are not the most liquid. They usually have a long period of time in which you cannot get your money back. You can find CDs that are short term, but usually they are not.
In conclusion
The best way to invest in liquid investments is to keep them in a safe place, and to know what you are investing in. If you follow these guidelines, you will be able to make sure that your investments are safe while also being able to access them when you need them. This will allow you to invest money without having to worry about losing it.