A liquid investment is the safest way to receive money in an emergency. They’re also an excellent option if you have short-term savings goals like saving up to get a brand new vehicle or for a down payment on a home, or even in any kind of money emergency.
What is a liquid investment?
A kind of investment that can be, transformed into money easily. While having small or no impact on its value. Liquidity means a business or person has assets that are enough money to help them make bills payments on time. Liquid assets are comparable to cash because when sold, their value stays similar. Liquid investments have a low impact. Low impact means that it won’t take time ie. energy. It will significantly convert your assets to cash.
Liquid assets or opportunities are usually safer means to spend your money quickly to still be able to access. That makes them a good choice at your emergency fund or cost savings being short-term.
Five Best types of liquid investments
Liquid investments are the best choice during any kind of emergency, the best types of liquid investments are mentioned below:
Checking Account
- A checking account is a deposit account, which is a bank account you can make that helps you to keep as well as withdraw money.
- Checking accounts allow you to easily access your funds in a few ways.
- The checking account has low-interest rates in comparison to the normal savings account, but they offer us a better bonus.
Cash in hand / Cash on hand
- Most of the liquid assets are in the form of cash.
- The most reliable and easiest way of liquid asset.
- Cash doest even needs to be sold, if you need of money quickly and urgently then you can surely use cash on hand.
The Certificates of Deposits
- These are the liquids investment that has a slow process.
- Though their returns are higher than the money market or savings account.
- They are time deposits.
- If you open a CD account then you have to hold a particular amount of money for months to years.
Bonds
- They are another example of a highly liquid investment.
- They can be sold quickly and you will get the money as soon as possible.
Stocks
- Stocks and shares can be easily sold at the same price or higher than their market value.
- But there are always risks involved.
- This is the reason why Stocks are most favorable. The reason is that the values of stocks get fluctuated within seconds.
Conclusion
When there is an urgent or need for money one should always opt for a liquid investment.
The most favorable and risk-free and kinds of liquid investment are cash on hand, government bond funds. And if you want money urgently then one should always choose cash on hand investment as well as a stock investment. Stocks can pay the amount of money quickly but they come with risks as well. You all must be aware that, the rates of stocks get changed within seconds so always be aware of this issue and invest in stocks wisely.
