#Liquidity101 : What is Liquidity?#Liquidity101

In the financial world, liquidity is the ability to quickly convert assets into cash without significantly changing its value. This is a core factor that helps the market operate smoothly.

For example, cash has the highest liquidity. Stocks of large companies are also quite liquid because you can easily buy and sell them. In contrast, real estate or art collections often have much lower liquidity due to the difficulty of finding an immediate buyer.

Liquidity is important because it allows investors to flexibly manage capital and minimize risks when cash withdrawal is needed. For businesses, good liquidity ensures the ability to meet short-term debt obligations. Understanding liquidity helps you make smarter investment decisions.