💧 #Liquidity101: What is liquidity and why does it matter?

In finance, liquidity is the ability of an asset to be converted into cash quickly and without losing value. It is essential for assessing both investments and the financial health of a company or individual.

🔹 Example: Cash is completely liquid. Stocks are quite liquid, as they can be sold quickly in markets. In contrast, a house or a piece of art are illiquid assets: they can take weeks or months to sell and their value may fluctuate.

🔍 Why is it important?

High liquidity allows you to respond to opportunities and emergencies without losses. In markets, liquid assets are traded with lower costs and volatility.

💡 Tip: in your portfolio, balance liquid assets to maintain flexibility without compromising growth.