liquidity

Good morning! We ain’t talking about the states of matter here!

DEFINITION
What does it mean for something to be liquid?

• Liquidity refers to how easy it is for an asset to be converted into cash.

• A liquid asset is basically cash that’s easy to get to—like money in a checking account, an HYSA, or straight up cash.

• An illiquid asset, on the other hand, can’t be converted to cash quickly. That would be something like a piece of land or a car you’d have to sell to turn into cash.

PRACTICAL ADVICE
Your emergency fund should be liquid

• Don’t put your emergency fund into an investing account, that makes it way more annoying to use in case of an emergency. Because first, you’d have to sell off your investments before you can use it as cash.

• Put your emergency fund in a high-yield savings account or just leave it in a basic savings or checking account. Now when an emergency happens, you have cash READY TO GO.

OUR COMMUNITY
What are your questions? Or share a win!

• Reply to this email with any personal finance question you have, or share with me any wins in your life! (I’ll respond to your questions anonymously in future emails)