Investment is a long-term process, what you sow today is what you are going to reap in coming years. Keeping that in mind there are some investments that have very high liquidity but are risky in nature, on the contrary, there are investments that have very little liquidity but are very safe.
Investment with high liquidity is good for your short-term goals or for the purposes where you want money readily, like your emergency fund, you immediately got an emergency, what now?
You want money readily but it will be difficult to sell your stocks immediately, here investments with high liquidity like gold come to the rescue.
And the investments with the least liquidity are good for long-term investment, like real estate, they do not diminish greatly in value and give excellent returns in long term.
If you want to choose an investment with the least liquidity then you have come to the right place because in this blog I will tell you which investment has the least liquidity in 2022.
What Does Liquidity Mean?
First, let us see what does liquidity actually means.
To put it simply Liquidity of an asset is regarded as the ability of an asset to be converted into actual cash.
The more readily it can be converted into money higher is its liquidity.
Which Investment Has The Least Liquidity?
Here is a list of 3 assets that have the least liquidity when compared to others.
1. Land and Real Estate
We all know how profitable the business of real estate is, you can give your real estate for rent and then later sell it, whatever you may prefer to do, it is clear that land and real estate is a highly profitable asset and when purchased right can lead to even higher returns.
The real estate industry has experienced a growth of 11.2% from the year 2015 to 2020. But it is to be noted that real estate and land have the least liquidity.
After all, you can not immediately sell off your land or get a good tenure for your apartments. This is what makes real estate very efficient for long-term investment, but as far as liquidity is concerned real estate and land are the two assets with the least liquidity.
2. Collectible, Arts, and Antiques
These are also a type of investment, a signed painting from a renowned artist, a one-of-a-kind flower vase, guitar with Jimi Hendrix’s autograph on it, all of them worth millions and you can find them in auction stores or pawn shops.
You can also get them through some leads, but that is really difficult to do and on top of it, how can you surely say that it is real and not a replica?
Whatever the case may be, collectibles, antiques and arts are very good investments and if you can find the right buyer or market for them then you can really earn a fortune.
But that same thing also acts its negative point, the tough task is to find a buyer and a suitable market for the and that makes it one of the least liquidity assets.
3. Private Equity
If you have bought shares of private equity, a company that is not listed, then you have to find a market for them.
It is important to hold the shares of private equity for at least 6 months as they are restricted securities.
This is what makes them one of the least liquid assets, you first have to hold them for at least 6 months and after that, you have to find a market to sell them.
So, these were the 3 assets with the least liquidity.
Read Indian Top Investor Bio:
- Radhakishan Damani Biography, Portfolio, Net worth in 2022
- Rakesh Jhunjhunwala Biography, Portfolio, Investor, Net worth in 2022
(FAQ) Frequently Asked Questions about Liquid and Non-Liquid Assets
Here are some frequently googled questions about liquid and non-liquid assets.
1. Which investment has the most liquidity?
Cash is considered as the most liquid asset, after all, having cash in hand is the prime goal of buying liquid assets.
2. What is a great investment but is not very liquid?
If you are looking for a mid-line investment, which is neither too liquid nor is far from liquidity then you should consider investing in Gold.
3. What is the least liquid asset?
Land, buildings, and real estate are the least liquid assets.
4. Is 401k considered a liquid asset?
Yes, 401k is considered as a liquid asset provided that you have reached your retirement age and then you can withdraw cash without the fear of IRS early withdrawal penalties.
5. Is bitcoin a liquid asset?
Bitcoin or cryptocurrency, in general, is traded 24/7 over the globe but still, it is not very liquid compared to other assets.
So this was all about liquid and least-liquid assets.
The assets with the least liquidity are good for long-term investment whereas highly liquid assets are good for short-term goals.
May You Like Also: