A non-liquid asset is one that is not easily converted into cash. Due to the time it takes to convert land, and real estate investments into usable cash, these types of investments are classified as non-liquid. In contrast to liquid assets, whose prices can be promptly bought and traded, non-liquid ones tend to fluctuate wildly.
Equipment, real estate, automobiles, artwork, and collections are all common types of non-liquid assets. Non-liquid assets could also include ownership stakes in privately held companies. The time it takes for such assets to be converted into cash is unpredictable. It’s also more work to sell them off.
Consider property investing as an example. Real estate investments are non-liquid compared to other investing options. For instance, if you accept the first bid on a piece of property, you can end up losing a lot of money and putting yourself in a tight financial spot.
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