Learning the hard way: Liquidities
Some of the best lessons learned in life is through personal experience and they're not always the best experiences but quite often required. My recent bout with a financial battle saw me learn a valuable lesson about having assets that can be liquidated quickly.
With Interest rates predicted to continue to grow this year we're already seeing the less well off households making hard decisions on purchases and bills. While middle class household begin to feel the pinch the top 15% of income earners are still yet to feel the impacts.
A previous post of mine In 2023 Liquidity will be king rings true as this year as low fixed interest rates break it will leave many needing fast liquidity to pay down debt or meet their growing repayment needs.
The Need for Liquidity
Holding assets that can be easily liquidated during financial hardship is crucial for ensuring financial stability and security. Liquid assets, such as cash, savings accounts, Precious Metals and marketable securities, can be quickly converted into cash when the need arises, allowing not only people but also businesses to meet their immediate financial obligations.
During an economic downturn or a personal financial crisis, access to liquid assets can help people avoid taking on debt or selling long-term investments at a loss. For example, having an emergency fund can help people cover unexpected expenses, such as a medical bill or a job loss, without incurring debt.
Or given our current looming economic issue relating to interest rate rises building wealth in Gold and Silver provides people the ability to liquidate their holdings for cash can rather than taking out a loan or selling their long-term investments such as their home.
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These types of investments are key to providing a cushion during financial hardship but can also be used to create more wealth. Holding liquid assets can also help people take advantage of opportunities.
Having access to liquid assets will give you the ability to liquidate them and take advantage of good investment opportunities like buying a stocks at a discount during a market downturn. If you own a business with liquidities you can use your liquid assets to invest in new opportunities or expand your operations, helping you to grow and succeed in the long term.
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Lessons Learned in 2022
2022 gave me some really hard lessons around financial planning and how I thought I had it under control only to learn of the gaping holes I had in my plan. While I managed to scrap through that minor hurdle and continue the real question for me this year will be around how well I have learned and how much time I have had to gather my resources to build a buffer for what comes later this year, and if it will be big enough to ensure I am able to progress.
How are you preparing for the end of 2023?
Image sources provided supplemented by Canva Pro Subscription. This is not financial advice and readers are advised to undertake their own research or seek professional financial services.
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Great article, @melbourneswest!
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Thank you, lessons learned from last years crash that put me in a spot of bother and knowledge learned from you guys and your awesome group
Having easily liquidated assets is a great advantage during economic situations like these. It gives you the ability to move and not stay stagnant. Due to unpreparedness and lack of foresight, I also had to liquidate some long term investments and it wasn't fun doing it all!
Yup, we need to do better to teach people financial literacy
Precious metals are a great option and have a fairly high liquidity
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I think liquid assets are also a good way to stay invested but still have the money readily available. In my case, I tend to think of my stock account as something like that. As for me, I don't think I will be investing that much this year but I will continue to build my Hive account.
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