Liquidity
How quickly something can be bought or sold without moving its price. Cash is highly liquid; property is not.
In plain English
Liquidity is about how easily you can turn something into cash at a fair price. Highly liquid assets can be sold in seconds; illiquid ones can take weeks or months, or need a discount to sell quickly.
The word is also used for the overall amount of money flowing around the financial system, as in “central banks added liquidity”.
An everyday example
Shares in a large company like a FTSE 100 firm can be sold almost instantly during market hours. Selling a house can take months, and if you need the money fast you may have to accept a lower price.
Why it matters for investors
Liquidity matters most when you need your money. Keeping an emergency fund in something liquid, like cash, means you are not forced to sell investments at a bad time.
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Education only, not financial advice. Examples are simplified and use illustrative numbers.