💧 #Liquidity101 – Basics of Liquidity

📌 What is liquidity?

It is the ability of an asset to be converted into cash quickly and without a significant loss in value.

🔹 Types of liquidity:

Market liquidity

= The ease of buying and selling an asset in the market.

Accounting liquidity

= The company's ability to pay its short-term obligations.

🔹 Examples of liquidity (from highest to lowest):

💵 Cash = Highest liquidity

📈 Stocks = High liquidity

💰 Bonds = Medium

🏠 Real estate = Low

🖼️ Antiques and collectibles = Weak liquidity

🔹 Why is liquidity important?

Facilitates investment and financial planning

Protects individuals and companies from crises

Increases stability and efficiency of markets

🔹 How to enhance liquidity?

👤 For individuals:

Keep cash reserves

Invest in easily sellable assets

🏢 For companies:

Monitor cash flows

Maintain financial reserves