June 13, 2023

What is liquidity?

In the financial world, we can use the word liquidity to refer to our ability to rapidly obtain our money when we need it. Liquidity can be cash that you can use immediately, a backup savings account or chequing account containing ready-to-access funds, and more.

The term liquidity can also be used in reference to a company’s ability to quickly convert assets into cash, without losing a lot of value. Liquid assets give us freedom and fast access to funds when we need them.

Conversely, it can take months to receive cash from the sale of non-liquid assets (such as land or real estate investments). These non-liquid assets, on the other hand, may increase in value over time – which means that if we hang on to them, we may get a higher return on them (sell them for more money than we spent on them) in the future.

If you would like to discuss how to best manage your liquid and non-liquid assets, reach out to us today.

- Spire Advisors of Assante Capital Management Ltd.