Liquidity needs should be factored into asset allocation decisions from "summary" of All About Asset Allocation, Second Edition by Richard Ferri
When constructing an investment portfolio, it is crucial to consider your liquidity needs. Liquidity refers to how quickly and easily an asset can be converted into cash without significantly impacting its price. In other words, it is the ability to access your funds when you need them. Liquidity needs should be factored into asset allocation decisions because they play a vital role in determining the overall risk and return profile of your portfolio. If you anticipate needing to access a portion of your investments in the near future, you will want to ensure that those assets are liquid enough to be easily converted into cash without incurring substantial costs. On the other hand, if you have a long...
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