Financial Education

Liquidity requirements are any need for cash in excess of the amount being saved (or contributed in the case of endowments or pension plans) in a given year. Liquidity requirements usually stem from liquidity events.

Liquidity events may be planned for, such as a child’s education. They may also be unplanned, such as a medical emergency. In either case they require a portfolio allocation to assets that can be readily converted into cash without impacting their value.

In some cases, liquidity requirements can also be met by using derivatives or insurance products.

For more information, see all articles on: FInancial Planning, Portfolio Management

See also:

The Portfolio Management Process

Other Investment Constraints

Investment Objectives and Constraints for Banks

Steps in the Portfolio Management Process

Investment Objectives and Constraints for Insurance Companies