Financial advisers are quick to say that stocks and bonds are liquid. And I suppose in some rule book of theirs it may say this. However, to me liquid is guaranteed cash money I can get my hands on quickly. I suppose that’s stretching the definition of liquid to also include timeliness and risk factors. So be it.
Considering my conservative nature when it comes to my liquid accounts I usually look to bank savings accounts, or brokerage money market accounts for my emergency fund or vacation money. The interest rate on these accounts however are somewhere less than 1% these days.
So, the new go-to ‘liquid’ account is becoming Exchange Traded Funds (ETFs) for those looking for a higher return but still want to be somewhat safe with their investment.
As it states, these are traded funds in the stock market therefore the amount of your principle goes up and down all day but the money is typically invested in a safe vehicle that doesn’t move more than a few cents per day. However, some experts say these cents add up to more than the traditional money market account.
Check out the pros and cons of ETFs here on bankrate.com
Sakina Spruell is the creator of the Keeping It Rich brand of financial literacy products. Visit her at www.keepingitrich.com