Having wealth on paper is not the same as having cash.
Direct answer
Liquidity risk is the risk that you cannot turn an asset into cash quickly without losing value. Cash is highly liquid. Property and private investments are less so. Keep money you may need soon in liquid accounts and be wary of products that lock your money away.
Examples
- Selling a house can take months.
- Some funds restrict withdrawals during stress.
- Collectibles can be hard to sell at a fair price.
How to plan
- Hold an emergency fund in easy-access savings.
- Match investments to timelines.
- Check withdrawal rules and fees before investing.
- Do not rely on illiquid assets for short-term needs.
Where Teyro fits
Teyro's How to Understand Investment Risk course turns this into short lessons you can play in a few minutes a day. It has 50 lessons, and you can start free.
The bottom line
Always ask: "How quickly can I get my money back, and at what cost?" This is general education, not advice.
This is general education, not personal financial advice.
