Describes an asset that can be quickly, easily and cheaply converted into cash without affecting its market value. Cash is the most liquid asset. Publicly traded stocks and government bonds are also liquid but can take a few days, incur fees and be subject to changes in value. Real estate and collectibles are examples of illiquid assets because they can take far longer – from weeks to years – to sell and incur substantial fees to do so. It’s important to maintain sufficient amounts of money in liquid assets to avoid the risk that an emergency might otherwise force you to sell illiquid assets at a loss. See Liquidity
