What is Liquidity?

Liquidity is how easily an asset can be sold without impacting it’s overall price. For example, a FTSE 100 company will generally have a high level of liquidity, where a direct stock can be sold with the cash returned to the seller within just 2 working days via delivery vs payment. This is considered quick, easy and therefore liquid. However, on the flip side, a person selling a property will take much longer to raise cash and could take several months (or more in some cases). Therefore in comparison, the property would be considered a less liquid asset relatively speaking.

Share on Facebook

Tweet

Save