In asset liquidity, you can sell your assets for fast and easy money. This way, assets are being sold without even affecting its price. This is a good investment because it lets you make the most of your company’s assets and guarantees fast money compared to all other investments.
Most long term investments in the market these days have low liquidity. This is true to most companies that suffer from penalties as well as taxes that are associated with the early withdrawals from their accounts. Most companies with these types of long term investments suffer from shortage of cash because of the nature of their investment.
A lot of companies resort to trading their stocks in the public as this is one of the few high liquidity remedies available for them. Fortunately, these investments can be sold for no loss when it comes to values and there are also no taxes and fees. The only thing to consider is the amount of liquidity you will be needing in your assets. Individual investors are in need of moderate liquidity to help them out with their business ventures. This is because lay offs and other unexpected expenses may occur including medical bills. Which is why you need reserved cash readily available in case of emergency or other urgent matters.
This is the reason why building up a portfolio of your low as well as high liquidity investments is advised by financial advisors. Having a long term investment is advisable when you are saving up for your retirement. However, no matter how tempting it may be, you shouldn’t touch your investments before it matures. Thus, it helps a lot to have stocks that are producing money but at the same time, you can also sell if you are in need of urgent cash. This is where you will see the importance of a diversified and well balanced stock portfolio. Also, having an emergency fund is advised for many financial planners.
But there are specific guidelines for an emergency fund since they have to be enough to fund expenses for up to six months and it also has to be readily accessible when you need it and it also has to be at a high interest rate account.
One of the best known solutions for low liquidity investments is having emergency funds. This is because you can easily access your emergency funds when you have issues with penalties, taxes and all other dues. And liquidity is often an overlooked stock option. Yet as time goes by, more investors are getting aware of how important liquidity is for their investments.
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