Investment FAQ – What does Capital Liquidity mean?
Being liquid simply refers to the relative ability to readily turn one’s portfolio into cash.
Different asset classes have differing degrees of liquidity. Clearly being ‘liquid’ is an attribute, so it is often the case that less-liquid investments must deliver higher returns to compensate investors for the inability to access their capital as and when they want.
The ideal example of an illiquid investment is a direct property asset, but term deposits and some managed funds could be seen as illiquid.
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