Understanding Different Types of Liquid Assets
Assets can be categorized into two types: liquid assets and fixed assets. Having both fixed assets and liquid assets is essential in the short and long term. There are many types of liquid and fixed assets. Read the following to understand the two types of assets, the differences between the types of assets, and which type of assets you should prioritize. What are liquid assets? Liquid assets are those which you can turn into cash without losing out on their value in the conversion process. Even if the value is reduced during the conversion process, it is minimal. Different types of liquid assets include cash, savings account, treasury bonds, checking account, ETFs, money market funds, stocks, and mutual funds. What are fixed assets? Fixed assets are often referred to as tangible and noncurrent assets. These cannot be quickly converted to cash like liquid assets. Oftentimes, they are called “illiquid” because it may take time to convert them to cash. Examples of fixed assets are vehicles, land, equipment, furniture, machinery, antiques, facilities, buildings, and tools. Similarities and differences between liquid and fixed assets You can convert liquid assets to cash relatively easily but it’s not the same with fixed assets, which takes a long time to get converted to cash.