Securing Hannav Ledger...
Securing Hannav Ledger...
Glossary
Liquidity is the ease and speed with which an asset can be converted to cash without significantly affecting its price.
Liquid assets are easy to sell quickly at fair price — like savings accounts or large-cap stocks. Real estate is illiquid.
Liquidity varies by market depth, trading volume, and settlement cycles. Indian equity T+1 settlement improves liquidity. Debt instruments may carry lock-ins. Emergency planning requires maintaining liquid reserves separate from long-term growth assets.
Your liquid fund redeeming ₹2 lakh to T+1 bank credit offers high liquidity. Selling a flat in a slow market may take months and force a 10% price discount.
Most planners suggest 3–6 months of expenses in liquid funds or savings accounts before aggressive long-term investing.
ELSS has a mandatory 3-year lock-in, making them illiquid compared to open-ended diversified equity funds.
Illiquid assets like private equity or real estate often offer liquidity premium — higher expected returns compensating for access constraints.