The News GodThe News GodThe News God
  • Politics
    • Trump
  • News
    • Wars & Conflicts
  • Business & Finance
  • Lifestyle & Health
  • Law
  • Sports
  • Tech & Autos
  • Home & Garden
  • More
    • Travel & Tour
    • Education
    • Entertainment
      • Biography
      • Net Worth
      • Famous Birthdays
    • General
    • Games
    • Pets
    • Blog
    • About Us
    • Disclaimer
    • Media Partners
    • Why You Need to Read Business News Everyday
    • Authors
    • Terms of Service & Privacy Policy
Reading: What Are the Pros and Cons of Holding Your Money in a Liquid Form
Share
Font ResizerAa
The News GodThe News God
Font ResizerAa
  • Politics
  • News
  • Business & Finance
  • Lifestyle & Health
  • Law
  • Sports
  • Tech & Autos
  • Home & Garden
  • More
Search
  • Politics
    • Trump
  • News
    • Wars & Conflicts
  • Business & Finance
  • Lifestyle & Health
  • Law
  • Sports
  • Tech & Autos
  • Home & Garden
  • More
    • Travel & Tour
    • Education
    • Entertainment
    • General
    • Games
    • Pets
    • Blog
    • About Us
    • Disclaimer
    • Media Partners
    • Why You Need to Read Business News Everyday
    • Authors
    • Terms of Service & Privacy Policy
Follow US
  • About Us
  • Authors
  • Advertise
  • Contact Us
  • Disclaimer
  • My Bookmarks
  • Terms of Use & Privacy Policy
  • Media Partners
The News God > Blog > Business & Finance > What Are the Pros and Cons of Holding Your Money in a Liquid Form
Business & Finance

What Are the Pros and Cons of Holding Your Money in a Liquid Form

Rose Tillerson Bankson
Last updated: August 14, 2021 7:30 am
Rose Tillerson Bankson - Editor
August 14, 2021
Share
4 Min Read
What Are the Pros & Cons of Holding Your Money in a Liquid Form
SHARE

This is a complex topic that has been the subject of many a spirited debate at the dinner table. It’s not just a matter of how much cash you want to keep in your wallet. Debit cards count as liquid, too. The real question is how much you want to tie up in illiquid investments.

Contents
  • Pros of Keeping Your Money in Liquid Form
    • Avoiding the Use of Credit Cards
    • Easy Access to Emergency Funds
    • CDs and Money Market Accounts
  • Cons of Keeping Your Money in Liquid Form
    • Your Money Doesn’t Grow
    • Your Money Can Be Stolen
    • Cash Doesn’t Build Your Credit
  • Avoiding the Debt Trap of Illiquidity

The first argument for having liquid money on hand is to eliminate the need to use your credit cards. If you’re not there yet, use a loan payoff calculator to figure out how long it will take to pay off your current credit card balances by making just minimum monthly payments.

Not having to use credit cards is an obvious pro for keeping money in liquid form. There are also a few cons to it. For your convenience, we’ve listed out a few of both. Consider the following carefully.

Pros of Keeping Your Money in Liquid Form

Avoiding the Use of Credit Cards

We’ve already mentioned this, but it’s important enough to be listed here again. Using credit cards for purchases stunts your financial growth and could get you into serious debt. Paying cash is sometimes much better.

Related Posts

A Comprehensive Analysis of the Financial Transaction Tax
How Financial Markets Impact Everyday Life: An Explainer
What Is Factoring For?
Beyond the Dealership: Maximizing Your Money with Smart Car Loan Decisions
What are the key field service metrics to improve operational efficiency?

Easy Access to Emergency Funds

When that medical expense or major car repair comes along, you don’t want to have to liquidate assets that are difficult to sell. Money that is tied up in illiquid investments can’t help you in situations like this.

CDs and Money Market Accounts

These count as liquid assets because they can easily be turned into cash for expenses and unforeseen emergencies. They’re in the “pro” category because they also generate interest, helping you grow your money.

Cons of Keeping Your Money in Liquid Form

Your Money Doesn’t Grow

Liquid assets—other than CDs, savings accounts, and money market accounts—don’t generate interest, so your money won’t grow. Even the interest-bearing accounts we just mentioned barely beat the rate of inflation.

Your Money Can Be Stolen

Lose your wallet or pocketbook and your cash is gone. There’s no way to get it back unless some good Samaritan happens to find it. Parking your cash in stocks, bonds, or mutual funds can be much safer.

Cash Doesn’t Build Your Credit

Paying cash will help keep you out of debt, but it won’t build up your credit. There should be a balance between liquid and illiquid assets that allows you to use credit when necessary but pay cash at least half the time.

Avoiding the Debt Trap of Illiquidity

Illiquidity can create the need to borrow money when you shouldn’t need to. Investing too much into real estate, hard assets, or investment funds that charge a withdrawal penalty can leave you strapped for cash when you need it most. Don’t fall into that trap.

For best results, try to have three to six months in expenses available in liquid form. This can be cash in hand, money in checking or savings, or easily convertible CDs or money market accounts. Put the rest into an equity portfolio or Roth IRA. That’s how you build wealth.

Kevin Flynn

Kevin is a former fintech coach and financial services professional. When not on the golf course, he can be found traveling with his wife or spending time with their eight wonderful grandchildren and two cats.

What Does the Jewelry Manufacturing Process Actually Look Like?
Why A Human Touch Is a Must When Hiring a Virtual Assistant
Unconventional Careers Making Waves Now: Exploring Creative Job Options
Key Essential Strategies for Effective Building Facilities Management
How to Start a Welding Business with No Money: A Comprehensive Guide
Share This Article
Facebook Email Print
Share
What do you think?
Love0
Sad0
Happy0
Sleepy0
Angry0
Dead0
Wink0
Previous Article A Brief Guide Of Delta-8-THC Tinctures A Brief Guide Of Delta-8-THC Tinctures
Next Article ISO Test Detailed sketch for the ISO 21702 antimicrobial test

Latest Publications

Minneapolis Catholic School Shooting
2 Children Killed, 20 Injured In Minneapolis Catholic School Shooting
News
August 27, 2025
Hamas probably wouldn’t have attacked if Trump were the president, says Benjamin Netanyahu
Hamas “probably” wouldn’t have attacked if Trump were the president, says Benjamin Netanyahu
News
August 27, 2025
Denmark summons top US officials
Denmark summons top US officials over suspected influence operations in Greenland
Politics
August 27, 2025
From Classic to Contemporary: 8 Most Entertaining Vampire Books Ever Written
Entertainment
August 27, 2025
New York Tour Bus Crash
At least 5 dead, Dozen Injured in New York Tour Bus Crash
News
August 26, 2025

Stay Connected

235.3kFollowersLike
69.1kFollowersFollow
11.6kFollowersPin
56.4kFollowersFollow
136kSubscribersSubscribe

You Might also Like

Business & Finance

4 Products you should buy from KODA™

April 23, 2021
When it comes to selling your property, avoid these common blunders
Business & Finance

When it comes to selling your property, avoid these common blunders

September 28, 2021
How to Choose a Broker in 2021. Did you know that Forex trading is one of the most profitable businesses in today's world? It's not surprising that so many brokers are jumping ship, increasing competition among the various firms. While competition is a good thing, it has also bred fake brokers whose goal is to make you bankrupt. You must first outline a number of brokers before deciding how to choose a broker this year.
Business & Finance

How to Choose a Broker in 2021

June 4, 2021
4 Tips for Overcoming Common Obstacles When Applying Case Management Solutions
Business & Finance

4 Tips for Overcoming Common Obstacles When Applying Case Management Solutions

May 4, 2024
Show More
© 2025 Thenewsgod. All Rights Reserved.
  • About
  • Contact Us
  • Terms of Use & Privacy Policy
  • Disclaimer
  • Authors
  • Media Partners
  • Videos
Welcome Back!

Sign in to your account

Username or Email Address
Password

Lost your password?