What Type of Account is Typically the Most Liquid? A Detailed Explanation

What Type of Account is Typically the Most Liquid

Financial experts manage investments very well. In doing so, varied account types are put into perspective. For those engaged in a fluid business, they would normally opt for a liquid bank account – this is the account which can be easily taken out anytime there is a need for it. In short, from a bank deposit, this is a flexible source of hard cash.

Various financial obligations, no matter how big or small, require a liquid account to turn into once they are faced with a situation involving quick conversion of assets to cover an instant demand for cash. Now, when asked as to which type of account is normally the most flexible, a Checking Account has been so far rated to be at the top of the list. Here are some of the reasons:

Straight Money Equivalent

Unlike most of the marketable securities like gold reserves and real estate properties, a checking account is almost like a ready cash. Provided you have the account funded and the amount you needed withdrawn is sufficient, you can easily draft a cheque and ease yourself out of the bank with the needed amount at any given time. This is of course considering standard banking days and hours.

Moreover, banks now have the option to have the option for investor to have an ATM card linked to their checking account. This added more access to the funds as account holders can withdraw from their checking accounts even on weekends 24/7.

Unlimited Withdrawal

Unlimited Withdrawal

Being the account holder, you can always plan with the bank as to how much you can take out of your checking funds at any given time. Most of the time, you have no amount ceiling for withdrawal. Just see to it you do not overdraw. Otherwise, your check will bounce, and your checking account will be closed. However, if you are a preferred client, the bank would normally call you if there were an overdraft, whether you are aware that your account no longer has sufficient funds.

The freedom of cashflow is best experienced with this kind of asset. This is the kind of keeping money knowing you have a good place for your funds ready to be use during immediate times.

Smooth Encashment

Compared to accounts with Certificate of Deposit, a checking account is way smoother to cash out. Almost like a time deposit, the former is kept and expected to be taken out at a certain period. Although it may gain interest, this is less liquid in form as withdrawing the funds early can mean penalty deductible from the amount printed in the certificate.

However, a depositor should know that although checking accounts are readily available, it has the least yield among all other types of account. This is due to unstable status of keeping funds.


All other types of bank account, money market or accounts involving brokerage and retirement, when withdrawn earlier, automatically generates or incur the account holder penalties. Since funds intended for this are used by the facility for mutual funds, stocks, or bonds. It is somewhat like having a manager to move your money around. Thus explains the higher yields for non-checking account.

Among others, you can easily withdraw everything from a checking account, down to the last centavo and you cannot have any penalty at all. It is as simple as keeping your funds inside your wallet ready to use at your disposal anytime you want to.

There are other liquid investments but most of them requires wait time and it might take a few days the least to get your hands into your own funds. Considering the liquid accounts, here is a hierarch that follows Checking being the most liquid account type:

Other Liquid Account Types, In Order:

Here are your spendable liquid account options in order of quick conversion considering Checking as the top of the list:

1. Safe Deposit Cash

while keeping cash in a safe deposit box is also considered liquid account type, you might need to have an appointment to have access to it, or worse, you will have to go through rigid screening before you can finally get your hands into your needed funds.

2. Accounts Receivable

safekeeping post-dated cheques with stipulated amounts receivable may appear a sure source of funds but this normally cannot be accessed to prior to the date posted on it. The cheque date will determine as to when the funds will be available for the receiver to use or spend. This is never the easiest to have as this only becomes convertible once the check date indicated has arrived.

3. Money Market

marketable investment such as bonds, mutual funds, and stocks are also liquid assets. However, it comes with a likely thick page of terms and conditions. It covers a time frame where it normally cannot be used until the term required has been reached. It also has several signatories from bank officers and the absence of even just one can delay conversion.

4. Tax Refunds

Tax Refunds

not a guaranteed source of asset, this is not even looked forward by investors. Although it sometimes comes as a surprise to taxpayers, this normally just happened once a year. So, this cannot cover emergencies especially tax period is still far from the date the funds are needed.

5. Real Estate Investments

passive income from properties purchased is not that fast-converting into cold and hard cash. Unless the investment is a hot-selling unit, it would take months to dispose of a property. Chances are, the price must be dropped should funds from the proceeds of the sale will immediately be needed, or charges and fees for selling it will be higher.

Understanding the characteristics of every account type is important so you do not run out of resources especially if you are into business which requires day to day expenses. This way, you can manage the influx of your monetary needs, according to when you need it, and how fast you can get access to it.

Relevant Resources: 


Please enter your comment!
Please enter your name here