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Liquidity

In finance, the term liquidity is used to describe how quickly an asset can be converted to cash.  This is an important concept and you should think of it in terms of a spectrum: highly liquid to illiquid.  The most liquid asset is cash (like your checking account or savings).  One step down the liquidity scale would be assets like stocks and index funds.  At the far end, assets like houses are not very liquid.  And, a part ownership in a small private business is a very very illiquid asset.




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