Anything you own that can be converted into cash easily is considered to be a liquid asset. Other than cash, some other items like savings and checking accounts or various kinds of other investments can also be considered as liquid assets.

Liquid assets are one of the most common types of assets which are used by a large number of consumers as well as businesses. Some of the types of liquid assets are:

1. Marketable security
Investments which can be bought and traded or sold on various public exchanges are called marketable securities. The buying and trading process of marketable securities is very simple and less time-consuming, which is why it is considered as a liquid asset.

Shares in various private corporations are not considered liquid because they are difficult to sell. It takes a lot of time for shares to convert into cash compared to public stocks.

2. Treasury bonds
Maturities in treasury bonds can range from a few weeks to 30 years. You can opt for short-term security rather than going for long-term security. Short-term securities can be considered as liquid assets as you will be getting your money back within a short period of time. However, the interest rate is higher on long-term holdings than the short-term securities. If you sell a long-term security before it completes its maturity, you will incur losses.

3. Savings or checking account
If you have deposited money in a bank or any other credit union then you can access it anytime you want. Thus, a savings or checking account can also be considered as one of the types of liquid assets.

4. Mutual funds
Mutual funds are known to collect money from various investors and invest it in different kinds of marketable securities such as bonds, stocks or any kind of short-term debts. Mutual funds are generally popular among investors for various reasons.

Some of these reasons are:

• You would not have to invest a lot of money in mutual funds as they generally set a small amount of money for the initial investment.
• Fund managers usually do all the research such as selecting various securities and monitoring its performances.
• Mutual funds usually invest in different kinds of industries and companies which lowers the risk of losing a large amount of money.

The shares can be sold by the investors whenever they wish to and they would be able to get their money back within just a few days. This is why mutual funds are considered to be one of the most efficient types of liquid assets.

Other than these types, CD or certificate of deposit is also considered as a type of liquid asset because the duration can range from a few months to several years. It is essential to select your term carefully because there are high chances of penalty if you cash in before the expiration of the stated term.