What is Liquidity?
Liquidity describes how quickly and easily an asset can be converted to cash without significantly affecting its price. Cash is the most liquid asset; real estate is relatively illiquid.
Example
You can sell a publicly traded stock in seconds (high liquidity), but selling a house can take months (low liquidity).
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Related terms
ETF
An ETF (Exchange-Traded Fund) is an investment fund that holds a basket of assets and trades on a stock exchange like a single share, offering low-cost diversification.
Dividend
A dividend is a portion of a company’s profits paid out to shareholders, usually in cash and on a regular schedule. It is one way investors earn a return from owning stock.