Types of Liquid Assets (Other Than Cash) You Should Know About

There are a lot of “millionaires” who can barely make ends meet. How is this possible, you wonder? Well, the answer is simple: their home equity is worth a million or two, and while owning your own house is a great privilege and personal achievement, it might not be the wisest thing you can do with your money.

Most modern economists agree that keeping too much money in frozen assets sounds great; the reality is that liquid assets are just as important, but what exactly are liquid assets?

Cash is a liquid asset, but other assets can be quickly converted into cash. Here’s a brief list of different types of liquid assets you should know about.

1. Cryptocurrencies 

One of the best parts about cryptocurrencies is how quickly you can convert them into regular cash. Depending on the platform, you can sell crypto on various exchanges and get fiat currency within seconds. Moreover, this speed makes crypto an attractive, highly liquid option for fast transactions. 

Cryptocurrencies are no longer just speculative assets; you can use them to pay for goods and services, too. From online shops to select brick-and-mortar stores, more businesses are accepting crypto. This utility is a huge bonus, making it easier to use crypto daily. 

The crypto market constantly evolves, with new coins and tokens launching. Some of these “altcoins” gain value rapidly, making them exciting (but risky) investment opportunities. Furthermore, this potential for high returns attracts many investors looking to diversify their portfolios with digital assets, provided you can identify the next crypto to explode

As adoption rises, crypto is becoming more than just a digital asset. Blockchain technology is finding its way into industries from finance to gaming, increasing the utility of many cryptocurrencies. Also, new applications are constantly emerging, meaning the role of crypto in our economy keeps expanding.

2. Bonds

Bonds are often thought of as long-term investments, but they’re actually more flexible than you’d expect. You can sell government and corporate bonds on the secondary market before they mature, so they’re not as “locked in” as people assume. It’s a great way to get some cash back early. 

Bonds are popular for their stability, offering a reliable alternative to stocks. While they might not have the same high returns, their lower risk can provide peace of mind. Moreover, bonds offer predictable earnings, which makes them a go-to for conservative investors looking for steady growth.

Bonds pay interest, so you know exactly what you’ll earn and when. This regular income can be a lifesaver, especially if you’re looking for consistent returns. Plus, the interest rates are usually fixed, so you won’t have to worry about sudden changes in income.

While bonds are generally long-term assets, you can still cash out by selling them in the bond market. This makes them more liquid than they seem, especially if you’re in a tight spot. So, if you need cash and can’t wait for the bond to mature, selling is an option. 

3. Stocks

One of the best things about stocks is how quickly you can turn them into cash. Stocks are traded daily, and you can sell them at the current market price with a few clicks. Also, having this kind of flexibility means you’re not locked into long-term commitments. 

Stocks don’t just sit in your portfolio; they pay out dividends, which is a nice little bonus. These regular payments can help you generate a steady income without selling your stocks. Moreover, dividend-paying stocks are often seen as reliable, adding a sense of security to your investment. 

Selling stocks is straightforward and fast whenever you need cash. Unlike assets that may take days or weeks to convert, stocks can be sold at the current market value, getting money in your hands quickly. This liquidity is a major advantage, especially in times of financial need.

Stock markets offer something for everyone, whether you’re risk-averse or a thrill-seeker. You can pick investments that match your risk tolerance, from blue-chip stocks to emerging markets. Also, this range gives you room to diversify and build a portfolio tailored to your goals. 

4. Mutual funds

Mutual funds bundle different stocks or bonds together, making it easy to get diversified exposure. This means you’re not putting all your eggs in one basket. Also, with professionals managing the fund, you don’t have to worry about picking individual stocks or bonds, which saves time and effort. 

Unlike stocks that can be sold instantly, mutual funds take a day or two to cash out. While not instant, it’s still relatively quick, especially compared to less liquid assets. This slight delay is worth it for those who value a diversified, managed portfolio.

Investing in mutual funds can mean a steady flow of income from dividends or interest. This can be especially beneficial if you want to reinvest or supplement other income sources. Moreover, it’s an easy way to earn without monitoring individual stock performance daily. 

Mutual funds come in all flavors, from conservative to aggressive. This range allows you to choose a fund that aligns with your risk tolerance. Whether you’re playing it safe or looking for high-growth opportunities, there’s a mutual fund tailored to your preferences.

5. Exchange-traded funds (ETFs)

ETFs are great because you can buy and sell them just like stocks. This flexibility makes them a popular choice for investors who might need to cash out quickly. Also, ETFs can offer exposure to various sectors without the complexity of mutual funds.

The ETF market is currently estimated at $11 trillion, which makes it a major asset.

ETFs let you pick investments that match your interests and goals. Whether you want broad market exposure or something more specific, like tech or energy, there’s an ETF for it. Moreover, they’re designed for both beginners and seasoned investors seeking diversified portfolios. 

One big advantage of ETFs is the lower fees compared to mutual funds. This means more of your money stays invested rather than going to management fees. Plus, over time, these savings can make a noticeable difference in your portfolio’s growth, boosting your long-term returns.

ETFs are not just about growth; many also pay dividends, providing an extra income stream. This combination of growth also pays dividends, providing an extra income stream.

6. Money market funds

Money market funds focus on short-term debt from stable institutions, offering security and quick returns. These funds aim to maintain high credit quality, making them safer than other liquid assets. Plus, they’re designed to provide stability for investors seeking reliable, conservative options.

One of the best parts of money market funds is their low fees, making them a cost-effective investment. Additionally, their high liquidity means you can convert them to cash quickly, which is ideal for anyone needing access to their money without paying high transaction costs.

If you’re looking for a safe place to park your money, money market funds are a solid choice. They’re less volatile than stocks and even bonds, so you won’t see big swings in value. Also, they’re perfect for investors focused on steady growth over time. 

In a pinch, you can convert money market funds into cash within a day. This makes them especially useful for people who want their investments to stay liquid. Moreover, the speed of this conversion is a huge benefit, allowing quick access to funds whenever needed. 

Liquid assets are important for your overall security

Keeping some liquid assets on hand can make all the difference in financial resilience. From stocks to precious metals, each option offers unique perks, whether it’s quick cash, steady income, or inflation protection. Also, by diversifying your liquid assets, you gain both flexibility and stability, helping you with financial ups and downs with ease.