In the few months leading up to the arrival of a baby, it is paramount to make a horde of decisions, including how to deal with the infant’s bodily wastes. Despite their diminutive sizes, It is common knowledge that babies tend to come with an avalanche of body wastes, and it is essential to make the best decision. Diapers are the go-to shields from the said avalanche, but there is still a decision to make as to what kinds of diapers you need for your child, when you need them and what quantity.
|Liquid Assets||Illiquid Assets|
|Converts to cash quickly||Converts to cash in less time|
|Usually, retain value over time||The value fluctuates; the owner may have to sell at a lower price if the sale is hurried|
|Demand is usually high||Demand is lower than in liquid assets|
A liquid asset describes an investment that can quickly be converted to cash to see to financial obligations that may come up daily. Examples of liquid assets include cash in hand and cash at the bank. It also refers to common stocks listed on the exchange, top-grade corporate bonds, marketable securities, and treasury bonds.
An Illiquid asset is an asset that cannot easily convert to cash to meet financial obligations. Examples of illiquid assets include; property (such as real estate, art, furniture, or cars), Stock in companies that have not been traded, and even loans given to friends.
Liquid Assets VS Illiquid Assets
It is easy to mistake Liquid assets for illiquid assets because liquidity exists on a spectrum. This spectrum means that while some assets are completely liquid or not, some assets can also be more fluid than illiquid or vice versa. An easier way to tell the difference is by looking at them as either fixed or current assets. Current assets are assets that can be quickly converted to cash within a year without diminishing in value. In contrast, fixed assets are long-term tangible assets usually used in a business, such as machinery. However, these categories are not absolute since liquidity depends on how easy and profitable it is to dispense an asset, fixed or not.