The ability to quickly convert an investment into cash. A savings or
money market account that you can withdraw money from at any given moment without a penalty always
offers the best liquidity. Other investments that allow quick conversion to cash, such as a
No Penalty CD, can also offer excellent liquidity. CDs generally are less liquid than savings,
but may offer a certain amount of liquidity if the bank allows withdrawal with payment of a
reasonable early withdrawal penalty. Long-term bonds are generally considered less liquid
(some bonds aren’t liquid at all). Real estate investments are perhaps the least liquid
investment class.