What does it mean if your assets are liquid or have liquidity?

If your assets are liquid, it means they can be quickly and easily converted into cash without significantly affecting their value. Examples of liquid assets include cash, bank accounts, and stocks. Liquidity refers to the ease of this conversion process; higher liquidity indicates a more straightforward transition to cash. Conversely, illiquid assets, like real estate or collectibles, may take longer to sell and could incur a loss in value during the sale process.