Liquid assets

Payday Loan Canada

Mortgage Dictionary -> Liquid assets

Liquid assets are a term that refers to far more than the paper cash and metal coins lining your pocket. In fact, it refers to any form of easily accessible money held under your name either by yourself or with any legitimate financial entity. Liquid assets come in many forms, most of which are not actual legal tender which can be held in a person's hand.

The most prominent form of liquid assets is money held by a bank in a checking or savings account under an individuals or businesses name. A checking account is typically a non-interest bearing account from which monetary payments and withdrawals are made easily either via writing a check to represent the value of a certain amount of money or by utilizing a debit card to initiate an immediate debit from the payers account to the payees account. A savings account is an interest bearing account which holds additional funds meant to be kept in reserve for a longer period of time than funds in a checking account, but are still considered immediately accessible by the account holder and thus are called liquid assets.

Additional sources of liquid assets include money market accounts, mutual funds, stocks, bonds, and CDs.

Money market accounts are FDIC insured accounts similar to a savings account, often offering higher interest rates, but may be less available immediately and have a frequency limit for withdrawals from the account.

Mutual funds are unsecured, potentially high-interest accounts in which multiple individuals or companies pool money together for investment purposes. These do come with the risk that all of your investment may be lost.

Stocks are issued certificates in the stake of ownership of a company at a certain value. Stocks have a growth potential that is solely dependent upon the success of the company and the willingness of others to invest in the company for future growth. All investments in stocks can be lost.

Bonds are government issued certificates in which you pay in a specific amount and after a set period of time the bond will mature and reflect its face value which is slightly higher than the amount you paid in, but it is guaranteed that you will receive the value printed on the bond.

CD's are FDIC insured accounts that draw higher interest, yet bear penalties if you withdraw them before their date of maturity.