Liquidity
A practical explanation of Liquidity, including what it means, how it is used, and why it matters in real savings decisions.
Definition
The rate at which an asset is converted to cash without losing value. Cash has the strongest liquidity, while five-year time deposits have relatively weak liquidity.
Expert Financial Advice
“With the Twelve Depository Certificates Act or the Tiered Deposit Act, you can get current-like liquidity while enjoying high-interest term yields.”
? Why Should You Understand Liquidity？
Deposit planning does not only look at earnings, the really good configuration must also take into account liquidity. Otherwise, once withdrawn in advance, the advantage of high interest rates will be quickly wiped out.
Key Points for Understanding This Term
- Current liquidity is highest, but yields lowest.
- Long-term periodic returns are higher, but liquidity is sacrificed more.
- The tiered deposit method and the twelve-deposit certificate method are essentially liquidity optimization schemes.
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