Do You Have Enough Money in Liquid Assets?

Investing is absolutely essential to building wealth over time, but growth is no the only factor to consider when investing.

Liquidity is a measure of how readily a financial asset or piece of property can be converted into usable, spendable currency.

Cash, as well as money in a checking or savings account, is completely liquid - ready to use at a moment's notice.

Money tied up in property like real estate and vehicles is highly illiquid and can take considerable time to convert to its cash equivalent.

Many investment assets, such as typical stocks and bonds, sit somewhere in between. They can be converted to liquid assets quickly, but not immediately.

Liquid assets are vital for financial security. You need them to pay for everyday expenses and short-term goals as well as emergencies and other unplanned expenses.

Assets that are NOT liquid, like real estate and mutual funds, typically have much higher growth potential than liquid assets like cash savings.

For long-term financial goals, it is necessary to put significant money into these assets, but healthy personal finance also requires liquid assets on-hand.

When you need money to fix the car or pay a hospital bill TODAY, most investments won't be there to help. So we need balance.

Make sure you always have enough liquid assets on hand to cover upcoming expenses as well as emergencies, and give the rest of your money time to grow.

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