Liquidity Risk
There are two friends
Both are invited for a party
One of them drives a Mercedes
The other one books an Uber
Both set out for the party
After covering some distance, it starts raining
And the Mercedes tyres sink into the mud and get stuck there
The other friend’s Uber too gets stuck
So he pays the driver, steps out to the concrete road and orders another Uber and reaches the Party on time
This is the story of Liquidity Risk
The Mercedes is like Real Estate
Even a Mansion worth crores can get stuck and remain unsold
And this can affect the course of your life
Uber on the other hand is like Financial Assets
It provides super flexibility
And ensures that you have the right amount of money at the right point in time
This ensures that the goal is never missed
So even an Uber can prove to be better than a Mercedes
I rest my case
