Liquidity Position

Liquidity

Liquidity position is an important aspect of your financial life. Liquidity describes the degree to which an asset or security can be quickly bought or sold in the market without affecting the asset's price. In other words, if you withdraw money from an account, you will not suffer a penalty or fee. Accounts that are considered liquid are

  • Checking accounts
  • Saving accounts
  • Brokerage accounts

It's up to your adviser on what they recommend, but typically a certain amount of income is recommended to be in liquid accounts for day to day spending, in the case of an emergency, and if you lose your job. Your adviser may recommend a percentage of income or anywhere from 3 months to 6 months to 12 months or perhaps beyond.

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