A low-risk investment and a checking or savings account are a few types of liquid assets through which you can easily acquire cash. So, if you need money for any urgent cause then these liquid assets can help you. There are some other reasons which make liquid assets very important. Some of these reasons are:

1. During the times of emergency
Non-liquid assets such as your house or car can provide you with more money than liquid assets but you may face a lot of loss while selling them. If you are facing a financial crisis and need some money to avoid this situation, then selling your non-liquid assets can be quite problematic.

While non-liquid assets may take some time to get sold, liquid assets can be sold quickly and will provide you the amount of money you need. If someone loses their job then liquid assets can help them while they look for another job.

2. Low risk
As liquid assets can be sold quickly, they usually carry a very low risk of losing money than the non-liquid assets. The government of a country can insure some types of liquid assets such as a certain amount of money in your savings account. This reduces the risk of losing your money to some extent even during uncertain times.

3. Applying for a loan
Liquid assets are known for their flexibility as they can provide the investor with some financial freedom. Liquid assets can improve the chance of loan approval if you are applying for one. Some lenders can also verify the number of liquid assets you own before providing you the loan. Owning various types of liquid assets or having a good amount of money can be of great help.

4. Buying new investments
Your liquid assets can help you if you are looking to invest in something else. If you have a money-market account, then you can buy new investments without selling your other investments.

5. The safe amount of liquidity
Usually, this depends on the total expenses of a person in one month, so the safe amount of liquidity may vary from person to person. In such cases, you would have to estimate your expenses per month first before determining the amount of cash you may have to invest in various types of liquid assets.

Most people generally advise to save at least six to nine months of expenses so that you can avoid any kind of financial crisis. Cash is always a must-have when it comes to financial flexibility. This makes it highly important to have liquid assets of different types.