#Liquidity101
🔍 #Liquidity101
📊 Liquidity means the ease of converting assets 💰 into cash without a significant loss in value.
👛 Cash = the highest form of liquidity, followed by bank accounts 🏦, then stocks 📈, followed by real estate 🏠 and gold 🪙, etc.
Example: If you have a car 🚗 and need money immediately, selling it might take time or cost you part of its value. Therefore, the car is less liquid than cash.
💡 In financial markets, liquidity is measured by your ability to buy and sell an asset quickly with the smallest difference between the buying and selling price (Spread).
📉 Decreased liquidity = difficulty in executing trades ➕ high volatility.
📈 Increased liquidity = quick execution ➕ price stability.
💼 A smart investor chooses assets with good liquidity to remain flexible during crises!
📌 Remember: liquidity = financial freedom of movement! 🚀