What is Liquid Assets?
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Liquid assets that financial planners often use. Liquid assets are investments for short-term/financial objectives under 1 year.
What are liquid assets? Are liquid assets the same as selling power?
Liquid or liquidity assets are assets that can be converted into non-cash cash in a relatively quick time, at a reasonable value. Sometimes liquid assets are equated with cash/non-cash, as their value is stable or unchanged significantly in the open market. Then an asset to be sold quickly in a market at a reasonable selling price is called the usual selling power called marketability.
If you ask if liquid assets are always easy to sell?
Answering that question is not all liquid assets are easy to sell, for example, a check or savings account. Cheques can be cashed without reducing their value, but in Indonesia, there is no legal market that sells cheques like in other countries. The Government of Indonesia prohibits the sale and purchase of cheques in our country.
Likud Assets in Family Finance :
Some financial products included in liquid assets are cash, checks, bank deposits, bank deposits, money market mutual funds, and several types of bonds. The most liquid assets include cash, cheques, and savings at the bank. The risk faced by liquid assets, in general, is the risk of reduction in purchasing power.
The risk of reduced purchasing power is the risk of diminishing the value of our currency. The reduction in the value of the money is due to several factors of inflation/increase in the price of goods. For example: savings interest in banks is 1% per year (not yet tax-deductible). The increase in the average cost of necessities reaches 6%- 10% per year. If all the money is in the form of cash and stored in savings, then the money is reduced by 5%/yearly.
Likud's Assets For Family Financial Planning has an important role to play in meeting short-term needs. For example, a teenager wants to buy a laptop for Rp 5,000,000. The teenager can save Rp 1,000,000 per month consistently. Then the most likely and easiest way is to save Rp 1,000,000/month for 5 months. The value of the teenager's money will not be significantly reduced in the next 5 months and the teenager can still buy the desired laptop.
Conclusion :
Managing liquid assets is one of the things that is lived in managing personal or family finances. Liquid assets are very useful to meet the needs in the short term that is less than 1 year. Storing wealth in the form of liquid assets that are too is our unwise financial behavior in dealing with it. This is due to the risk of a change in the value of money.