Welcome to ‘Finance 101’; your go-to guide and bi-weekly series for breaking down complex finance jargon!
If terms like mutual funds, bonds, or REITs sound like a foreign language, you’re not alone. Trust me, my head used to hurt just thinking about them! 😅 Many people find navigating the world of finance confusing. That’s why we’re here, to demystify even the most mind-boggling financial concepts while keeping things fun and engaging. Because honestly, as we like to say in Naija, “I cannot come and kill myself”. Join us on this journey to boost your financial knowledge and invest in that future! 🚀
“To be liquid, or not to be illiquid: that is the question.”
(Hamlet, Shakespeare, Act 3, Scene 1 or at least we’re pretty sure that’s the quote)
Let’s say you’re hungry.
You open your fridge and spot two things:
- A bowl of jollof rice (blessings), and
- The thawing stew from last week, semi-rock solid, in a recycled ice cream container.
Guess which one you’re eating in the next five minutes?
That, dear reader, is liquidity in action.
First, What Is Liquidity?
Liquidity simply means how easily you can convert an asset into cash without affecting its value.
In other words, it’s like having a high-demand item at Balogun market – you can sell it fast and at a good price.
🥇Cash = The Beyoncé of Liquidity
Cash is the most liquid asset. It’s ready when you are.
Bank transfers, mobile money, card swipes instant motion.
But not all assets are created equal.
Here’s a quick liquidity scale:
So yes, that fancy painting on your wall might be worth millions, but good luck using it to pay for shawarma today.
Why Should You Care?
Because life doesn’t send a calendar invite before it happens.
You need liquidity for:
- Emergencies – Hospital bills, car repairs, urgent “can you quickly help me with 50k?” texts.
- Opportunities – Flash sales, quick business deals, discounted investments.
- Daily needs – Rent, food, fuel (or data, if that’s your priority).
Having all your money tied up in assets you can’t quickly access is like being rich… but stranded in the middle of an island.
So, What’s the Sweet Spot?
Good financial planning means striking the right balance between liquid and illiquid assets.
You need:
- Enough cash or near-cash assets to handle short-term needs and emergencies. Think of our SaveIN or Chapel Hill Denham Money Market Fund for this – easily accessible when you need it.
- Growth investments like mutual funds, stocks, infrastructure, and real estate to build wealth over time. For this, explore options like the Chapel Hill Denham Paramount Fund, the Nigeria Infrastructure Debt Fund and many other investment opportunities on InvestNaija.
✈️ Plan Your Finances Like You Pack Your Bags
It’s like packing for a trip:
· Your hand luggage carries essentials; easy to reach (liquid assets).
· Your checked bag holds the big stuff; for the long haul (less liquid assets).
Don’t get stuck at the airport with a laptop and no charger. ⚡
Pack smart. Invest smarter.
Let’s Break It Down:
✅ Liquidity = how quickly you can turn assets into spendable cash
✅ High liquidity = quick access, no drama
✅ Low liquidity = great for long-term wealth, bad for urgent needs
✅ A good portfolio = mix of both
Final Word:
Don’t just focus on “how much” you have. Also ask: how quickly can I get to it?
Because in money, just like in life, timing is everything.
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