- FinWord
- Posts
- Liquidity
Liquidity
Money in Hand > Money on Paper!
Disha Soni
March 11, 2025
FinWord of the Day
- March 11, 2025
What is Liquidity?
Liquidity is how fast you can turn something into cash—like having $500 in your account, not tied up in a car or stocks. It’s your financial lifeline. Imagine a surprise bill: liquid cash pays it; illiquid assets don’t.
In simple terms — Liquidity = Money you can use now.
Types of Liquidity
Asset Type | Liquidity Level | Example |
|---|---|---|
Cash | 💯 Extremely High | Savings account, Wallet cash |
Stocks | High | Publicly traded shares |
Mutual Funds | Moderate | Redeemable within a few days |
Real Estate | Low | Selling your house or land |
Life Insurance (Cash Value) | Varies | Borrowing against your policy or surrendering it |
Pro Tip - Balance is the key!
Too little liquidity can trap you. In 2022, 40% of Canadians had less than $1,000 liquid. A sudden expense? They’re stuck borrowing—or selling assets cheap. Balance is key: too much cash sits idle, too little risks panic.
Happy investing, and we'll see you tomorrow for another bite-sized financial term!
Thank you for reading FinWord! I’m Disha Soni, an Independent Financial Security Advisor based in Canada.
My goal is to simplify finance and help you feel confident of your financial journey.
If you’d like to explore how I can support your financial journey, connect with me here
Website: www.dishasoni.ca
Disclaimer:
All characters/examples in this article are fictional in nature. Any similarity to individuals, living or dead, is entirely coincidental. Nothing in this communication can be construed as investment or legal advice. Please consult your financial advisor before making any investment decision.
Reply