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Which Investment Has the Least Liquidity?

Last updated 03/20/2024 by

Benjamin Locke

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The liquidity of an investment is related to the amount of time it takes you to sell the investment and get it out of your portfolio. Rare collectibles with a niche market and real estate are among the most illiquid assets around, but there are other assets that are other contenders for the investment with the least liquidity.
The term “liquidity” refers to the time and effort it takes to sell an investment in a marketplace. Liquid investments don’t require much time or effort to sell. Two of the most illiquid investments around are probably rare collectibles and real estate. However, in a free market, things can change based on the state of the market and the structure of the investment.
When defining your portfolio’s risk allocation, it’s smart to choose a healthy mix of illiquid and liquid investments. This allows you to quickly sell some of your assets in case of a financial emergency and gives your higher risk (and higher reward) assets a chance to grow.

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Liquid assets 101

Liquid investments, in short, are easy to sell. You can convert them into cash at a moment’s notice in some cases. These investments can range from the funds in your savings account to preferred stocks held in your portfolio.
To get a better understanding of liquid assets, here are some examples of common liquid investments that you may already be familiar with.

Interest-bearing accounts

At the top of the list is the typical savings account that you might currently have with your bank, which pays you interest rates. You put money in your savings account and receive some interest in return, which is considered an investment.
The account is considered a demand account, meaning you can immediately withdraw money and “liquidate” it whenever you please. Typically your investment will be secured by the FDIC, making a savings account the most liquid and lowest risk investment you can make, as long as you have trust in the solvency of the federal government.

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Money market accounts

Money market funds and accounts are low-risk investments that bear even higher interest than savings accounts. They are typically housed in banks or credit unions. Many large funds and investment institutions will keep their unused capital in money market accounts because they are very liquid accounts with high interest rates.
If a hedge fund manages $10 billion, for instance, it might have an $8 billion investment in the stock market and another $2 billion waiting to be deployed. That $2 billion will sit in a money market account because of its low risk and high liquidity.

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U.S.-backed Treasury bonds

Although government-backed bonds do not always result in liquidity (see Greek Bond Crisis of 2011), bonds and treasuries backed by the United States are considered extremely liquid. This is because they are considered almost as good as cash and easily tradeable.
Treasury bonds are different from corporate bonds as they are backed by the solvency of the U.S. government. This is considered the highest grade of investment safety you can have. In addition to Treasury bonds, Treasury inflation-protected securities (TIPS) and savings bonds are also government-backed investments with considerable liquidity.


Exchange-traded funds (ETFs) are a popular way to invest these days. ETFs operate similarly to mutual funds except that ETFs can be traded on the stock market as if they were a stock. Even a mutual fund investor might prefer the liquidity of an ETF.
Many ETFs are linked to the performance of an index, and thus move and up and down depending on the aggregate trends of the stock market, such as the S&P 500. Particularly the larger ETFs from companies like Vanguard can be bought and sold relatively easily, and thus make them a very liquid asset.

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Illiquid assets 101 and examples

Illiquid assets behave in the complete opposite way as liquid assets. In these cases, it might take a lot of time to sell the asset, and it might not be that easy to do.
The least liquid investments are investments that might deliver you a greater return, and thus you are more likely to trade off the investment return for the liquidity. Furthermore, some illiquid assets, such as real estate, allow you to use leverage and increase your overall return on investment. Here are some examples of illiquid investments.

Real estate

Whether you’re buying a home to live in or looking to invest in a multi-family property, real estate is an investment that many people make in their lives. Unfortunately, real estate is fundamentally an illiquid investment that can grow more illiquid depending on the timing of the marketplace.
  • Homebuying process. Real estate is considered illiquid because it takes a lot of time and money to sell. Not only do you often need the help of a real estate agent, but you also have to work through the closing process. This usually involves a title company or some other third-party entity that performs due diligence and legal checks to make sure everything is up to par for the buyers. This can take time.
  • Market timing. Depending on the market timing, real estate can be an incredibly illiquid investment in which you can lose money. This is because the market might not have many buyers. During a sellers’ market, one property may have multiple offers. At other times, however, sellers may have difficulty finding a single interested buyer.
Looking to buy a home and take advantage of today’s relatively liquid market? Here are some mortgage lenders that can offer you the best rates.

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Certificate of deposit

Certificates of deposit (CDs) are savings accounts or savings bonds in which you agree to lock up your money for a certain amount of time for a high interest rate. Since you lock up the money, you receive a greater return on interest than you would with a typical savings account.
Though you do have access to the funds within a CD, you may incur fees if you decide to take out the funds before the contracted time. This limited access makes CDs one of the less liquid assets.


Baseball cards, art, and now the famous NFTs are examples of collectible investments. Although collectibles can yield big returns, they are notoriously illiquid and difficult to sell. This is due to the lack of buyers.
Let’s say, for instance, that your investment collectible of choice is ABA basketball cards. Because this specific league no longer exists, there probably aren’t many buyers that collect ABA cards. This means your pool and ability to sell are limited. You need to find other ABA card fans to convert your card to cash.

Private equity and private placement

Buying and selling equities or shares of a company that are not openly traded on the stock market can be an illiquid investment. The exit strategy of the investment is to find another buyer for the company or have it go public. This process can be arduous and take an incredible amount of time and money.
Funnily enough, in the private equity industry, an event in which investors can take back their investment capital and profits is called a “liquidity event.” However, waiting around for liquidity can take ages, so it’s best to consider this an illiquid investment no matter what.

Exotic cryptocurrencies

Cryptocurrencies that aren’t widely known may be difficult to find on any major exchange applications, making them an illiquid asset. This is because the buyers and demand for these cryptocurrencies are much lower than, say, Bitcoin or Ethereum.
This is important to consider as there are now over 18,000 cryptocurrencies in existence. The vast majority of these should be considered very illiquid.
Money market accountReal estate
Savings accountCollectibles
U.S. Treasury bonds, notes, and securitiesExotic cryptocurrencies
ETFsPrivate equity/placement

So, what’s the most illiquid investment?

Most finance experts consider real estate, collectibles, and privately held company equity to be the least liquid. However, there is no permanent answer as an asset may become more illiquid depending on the current market.
For instance, say you hold one exotic cryptocurrency and also have an apartment near a city. Both real estate and exotic cryptocurrencies are generally considered illiquid investments. However, if the crypto market has crashed, but the real estate market is booming, this means that your exotic crypto coin is way more limited than your apartment.
Does this mean that exotic crypto is generally more illiquid than real estate? No, it just means that the market timing is different in two different asset classes. There could be a scenario where the real estate falls but your exotic crypto is soaring.

A low-risk investment offers maximum liquidity

When considering various investments, it’s important to remember that more liquid assets typically carry less risk. You can immediately get out of a high liquidity investment and thus are protected against a protracted downside.
If you invest heavily in illiquid investments, on the other hand, you risk taking on a prolonged downside since you can’t move out of the investment when you want.

Pro Tip

It’s important to make sure you are diversifying your portfolio with both illiquid and liquid assets. This means incorporating both high risk, low liquidity investments that give a higher return as well as low risk, highly liquid investments that produce a lower return. Speaking to a financial advisor can be greatly beneficial for understanding percentages and how to structure them.


Which account has the least liquidity?

Though the answer may change depending on current markets, most financial experts consider collectibles, real estate, and privately held equity to be the least liquid assets.

Which investment has the most liquidity?

There is no 100% answer for this either, but an interest-bearing savings account and a money market account are typically considered the most liquid investments.

Are investments liquid assets?

An investment is considered a liquid asset only if the actual investment is considered liquid. For example, an investment in a money market account would be considered a liquid asset.

What is a great investment but is not very liquid?

Real estate is a great investment that is generally not considered very liquid due to the time it takes to typically sell a property.

Key Takeaways

  • Investments are considered liquid or illiquid based on the time it takes and how easy it is to sell.
  • Interest-bearing savings accounts, money market accounts, and U.S. Treasury notes and bonds are some examples of liquid assets.
  • Real estate and rare collectibles are among the most illiquid assets around.
  • An investment’s liquidity can fluctuate depending on the type of investment, the timing of the market, and the pool of buyers.
  • Investments with high liquidity generally have lower risk than low liquidity investments.

SuperMoney may receive compensation from some or all of the companies featured, and the order of results are influenced by advertising bids, with exception for mortgage and home lending related products. Learn more

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