Which Investment Has The Least Liquidity?

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Everyone has his/her eye on a particular asset they want to invest in. Whichever asset you decide to invest in, there is a chance of either losing or gaining money. One common goal and not-so-new goal of investors is investing in assets that can yield profit.

One true attribute of an investor is risk-taking, but even at that, you will want to risk it with investments that have the least liquidity. Below is some investment that comes with a lower risk of losing their value

 

Which Investment Has The Least Liquidity?

 

It is no doubt any type of investment has some level of risk attached but some are more than others. You will not want to invest your hard-earned money in a high-risk asset. A least liquid asset is hard to sell or rather it takes longer to sell than an asset with high liquidity. 

Below is some carefully selected investment you can dive into that has the least liquidity (low risk) compared to other numerous investment available.

 

  • Land Properties and Real Estate

Land and Real estate property/properties are one good investment with the least liquidity you can dive into. Whether you are buying a home to live in for rentals, or leasing, your investment keeps growing, and its value increases with time. 

Real estate is an illiquid asset because it takes time to sell and most time you need the help of a real estate agent. If you don’t wish to sell or live in your property, you can still gain by giving it out for rent.

 

  • Saving Bounds

Saving bonds are a low-risk investment option. There are two types of saving bonds sold by the United States Treasury. The first is the EE bonds while the second is the Series I Savings Bonds

The former earns you a fixed amount spanning 30 years while the latter is by a combination of a fixed rate and inflation rate. 

 

  • Arts, Antiques, and Collectibles

Artworks, collectibles, and antiques when bought right can bring a handsome return to an investor. Some of these artworks could be a unique flower vase, an old guitar of a renowned celebrity, or artwork with the artist’s signature. A lot of wealthy people invest in these unique and rare paintings, cars, watches, coins, and other collectibles. 

Most of these collectors buy their priced possession at auction houses and sell them there through a bidding process. You can buy at a certain price and when selling, you might get twice the price you got it or even more.

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  • ETFs

Exchange-traded funds (ETFs) are one of the most popular illiquid assets to invest in these days. ETFs are similar to mutual funds. They can also be traded on the stock market, unlike mutual funds. 

Some mutual fund investors are slowly chipping into ETFs. You can buy ETFs from companies with projected high profits.

 

  • Gold

There has been an increase in the number of gold investors lately. Gold, unlike diamond, doesn’t have a fixed price, rather it fluctuates quite a lot. With the fluctuation, the percentage of the drop is almost negligible as compared to the rise in price. With the global increase in the gold price, If you invest in gold today, there is a higher chance of getting double the amount in 5-10 years. 

Another reason that makes gold a least liquid asset is that people do not easily sell their gold except in terms of emergencies. You can either buy gold bars, coins, or pieces of jewelry for women. If you are scared of security, you can get insurance for it or better still keep it at a bank.

 

  • NFTs

All thanks to digitalization and cryptocurrency, Non-fungible tokens (NFTs) are more like arts and collectibles but in a digitalized way. They are rare tokens that you can buy and sell for a much higher value with time. 

 

When investing in NFTs, make sure to buy unique collections as they tend to bring more profits. Selling NFTs is quite hard which makes it one good investment with the least liquidity.

 

  • Cryptocurrency

Investing in exotic cryptocurrencies that are not widely known can be a good form of n illiquid investment. Find these currencies that are not on major exchange applications and platforms and invest in them. 

 

They yield higher profit because there is a lower buying and selling of these cryptocurrencies unlike the mighty Bitcoin, Ethereum, or BNB. There are a lot of cryptocurrencies that you can invest in, do your research and decide what coin you will like to invest in.

 

  • Buying Company Shares

By buying shares of a company, whether they make a profit or not you still own a part of the company’s assets. This is a good long-term investment with the least liquidity because it takes time to sell them. 

 

You can research companies with the potential of making a higher profit and buying their shares. No one can tell how long it’ll take for the company to make a profit but whatever the case might be you own a part of it.

 

  • Certificate of Deposit

This is one of the most popular types of investment with the least liquidity. They are issued by banks and with interests that are time bonds. Some CDs mature as early as 1 month while others take years. 

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The longer the maturity time the higher the reward. Taking your money before the agreed maturation period attracts a penalty (fine). If you are looking out for a long-term investment plan then this might be the one for you.

 

  • Your Own Business

One good investment that has low liquidity is buying an already existing business. This way, the business already has employees and is in full operation. Most times these businesses are well established and you are all in for a cash flow. 

 

This asset has the least liquidity because it takes longer to sell and has a limited number of potential buyers. When there is a buyer, the process of buying and complete transfer of ownership also takes months.

 

  • Retirement Account

You can invest your money in a retirement account. You can decide to take your money at any time you wish but there will be penalties. If you’ve reached the required retirement age then there won’t be any penalties involved. 

There are some other legal exceptions where you are allowed to withdraw even without retiring.

 

  • Fixed Annuities

A fixed annuity is an investment with low liquidity where you invest in an insurance company. After the money invested gets to its maturity period you have two types of withdrawal methods. 

 

Either you take interest monthly or you take it all at once. The form option will be good if you are retired, however, it all depends on what you want.

 

  • Private Equity

Some shares and equities of a company are not traded openly. Most of them are low-risk equities and shares. You can get to buy these types of assets through an investment firm. Buying these types of shares takes time and money which makes it the least liquid asset. 

 

There is not much availability of them, so when there is one a lot of investors are up for grab. Before selling these shares, you must have held onto the shares for a minimum of 6 months depending on the company.

 

  • A High-Yield Savings Account

This is technically more of savings than an investment but it is one way to get a higher return and low risk. All you’ve to do is to open an account and get it managed by the bank while you gain interest. 

One advantage of this account is it isn’t bound to any contract and you can take out some or all your money when will.

 

  • Money Market Account

These are accounts with high interest in savings with low risk. A lot of investment institutions keep large funds in these accounts which are mostly housed by banks or credit unions. These types of accounts require you pump in a high amount of money.

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You do not have to have a huge amount to invest. There is some investment that you can start with as low as $100 or even less. You can do further research on any of the above-listed investments with the least liquidity and invest. In the near future, you’ll be glad you did. 

 

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Conclusion

 

To enjoy most of the benefits of least liquid assets, you must be ready for the long haul. When you are in for a long-term investment, you can choose from the above-mentioned investment with the least liquidity. Be it real estate, gold, cryptocurrencies or some private equities investing in them will bring you a handsome profit. 

It’s also important to always remember that these least liquid investments are hard to sell either as a result of not having buyers or due to the long process involved in selling them like real estate and land. You have to be in for a long-term and exercise patience.

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