#Liquidity101 Liquidity" refers to the ease with which an asset can be converted into cash without significantly affecting its price. It is a fundamental concept in finance. Assets with high liquidity, such as cash and government bonds, are easily tradable. Assets with low liquidity, such as real estate and artworks, take longer to sell.

For investors, liquidity is crucial. Good liquidity ensures that you can access your capital quickly in case of need or to take advantage of new opportunities. Companies also worry about liquidity, as they need cash flow to cover their operations and debts. Managing liquidity effectively is essential for the financial health of individuals and organizations.