For investments, liquidity is a measure of how quickly or closely an investment can be converted to cash. Bank checking accounts, savings accounts , short term bank CDs, money market accounts and money market mutual funds are highly liquid investments. Real estate is not very liquid do to the length of time it would take to convert real estate holdings into cash. Viewing a portfolio or group of investments to monitor and evaluate the level of liquidity in the overall investment structure is an important financial measure.
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