What Are Examples of Liquid Assets?
Some examples of liquid assets include cash held in a safe deposit box, checking accounts, saving accounts, money market accounts, U.S. Treasury bills and some types of retirement accounts. An asset is liquid if you can quickly turn it into spendable cash without a significant penalty or loss in the underlying value.
An asset is anything a person or entity owns. Assets can be classified as liquid or non-liquid, depending on how easy it is to convert the asset into cash. A person may evaluate his liquid assets to determine the ability to quickly handle a financial emergency. If most of a person’s assets are non-liquid, it is possible to have a high personal net worth but be cash poor and unable to pay monthly bills.
Real estate is an example of a major asset that is not liquid. It can typically take months to complete a real-estate sale, and attempts to sell real estate quickly can result in a significant loss in underlying value for the owner. Some assets can be considered non-liquid ordinarily but high liquid under certain circumstances. For example, a coin collection is an asset that is typically classified as non-liquid because it takes time to have the collection appraised and find a specialized buyer. However, if a person owns coins that a buyer has promised to buy at the full appraised price at any time the owner wishes to sell, then the collection can be classified as liquid.
