The ease with which you can get your money (in the form of cash) out of an asset is referred to as liquidity.
If your money is invested in debt funds, for example, you can redeem it and get your money back in just four working days. If you have money invested in real estate, getting it out could take weeks or months.
As a result, debt funds are more liquid than real estate in this situation.
When a share or stock is defined as illiquid, it means that there are no buyers or sellers for that stock.
Since they invest in relatively low-risk assets such as government bonds, liquid funds (a form of debt mutual fund) are considered very liquid. A liquid fund can be accessed in as little as two working days.
