Liquid Assets Definition

People sometimes see that we refer to liquid assets and ask us exactly what that means.

Liquid assets are those that can easily be turned into cash, at full market price, thus its value is not at all vague. A liquid asset may be a bank account, or a financial investment, such as a share traded on a stock exchange or a bond. The value of these assets are known at the point of purchase.

Property is not deemed to be a liquid asset and it can take a very long time to turn into cash and its value is usually an estimate and subject to negotiation until a final offer is made. Shares in unlisted companies can also be considered the same way, since they are less easy to trade and their value is a point of negotiation.

A grey area is pensions which, in some cases, may be easily turned into cash.