#Liquidity101 Liquidity refers to how easily you can convert an asset into cash without losing its value. In the financial world, liquidity is essential because it allows you to buy or sell assets quickly when needed. For example, cash has high liquidity, while assets like a house have lower liquidity, as it would take more time to sell them and obtain their cash value.

Good liquidity in markets means that transactions occur smoothly and at fair prices. For investors, understanding liquidity helps manage risks and better plan their moves. In summary, liquidity is key to maintaining flexibility and security in your finances.