Cash is the most liquid asset — spendable instantly. Large-cap stocks are highly liquid. Real estate, private businesses, and collectibles are illiquid — selling quickly usually means accepting a lower price.
Liquidity matters most for emergency funds (has to be immediately available) and less for long-term investments (where illiquidity sometimes comes with a return premium).
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Open Decision Lab →Frequently asked questions
Are bonds liquid?
Government bonds and large corporate bonds are reasonably liquid. Municipal bonds and high-yield corporates can be harder to sell quickly at a fair price.
Related terms
Bid
The highest price a buyer is currently willing to pay for a share.
Ask
The lowest price a seller is currently willing to accept for a share.
Spread
The gap between the current bid and ask price.
Cash flow
The difference between money coming in and money going out over a given period.
Bid-ask spread
The gap between the highest bid and lowest ask price for a security.