General
Liquidity
Also known as: Ease of Exit, Convertibility
The ease and speed with which an investment can be converted to cash without significant price impact.
Detailed Explanation
Liquidity refers to how quickly an asset can be sold or converted to cash. Highly liquid investments include savings accounts, liquid funds, and listed stocks. Low liquidity investments include real estate, PPF, and fixed deposits with penalties. Emergency funds and short-term goals require high liquidity while long-term investments can sacrifice liquidity for higher returns.