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#BTC110KSoon? Liquidity 101 Liquidity is the ability to convert assets into cash without affecting the asset's value. Highly liquid assets include cash, easily tradable securities, or bank accounts. In contrast, real estate or fixed assets typically have low liquidity due to the difficulty of selling them quickly. Liquidity is crucial in personal and business financial management as it affects the ability to meet short-term financial obligations. In investing, investors often prefer highly liquid assets to easily exit positions when necessary. Therefore, understanding liquidity helps you manage risk better and make more effective financial decisions.