#Liquidity101 Liquidity 101

Liquidity refers to how easily an asset can be converted into cash without affecting its market price. Cash is the most liquid asset, while real estate or collectibles are considered illiquid because they take time to sell. High liquidity means assets can be quickly sold or bought, providing flexibility and financial security. For businesses and investors, liquidity is essential for covering short-term obligations and seizing opportunities. Markets with high trading volumes usually offer better liquidity. Understanding liquidity helps in making smart financial decisions, managing risk, and ensuring smooth operations in both personal finance and business environments.