Liquidity
How quickly and easily an asset can be turned into cash without losing value.
Cash and a savings account are highly liquid — available instantly. Property is illiquid, because selling it takes time and effort and the price you get can vary.
Liquidity matters most for money you may need at short notice, such as an emergency fund, which is why such money is kept in safe, liquid places rather than volatile investments.
Key points
- High liquidity = quick access without loss of value.
- Savings accounts are liquid; property is not.
- Emergency money should be highly liquid.