Liquidity - Mutual Fund Advantages

Liquidity is the ability to readily convert investments into cash. Other investment products require investor to find a  buyer so that he can liquidate his investment. That is not the case with mutual fund shares because the fund itself stands ready to buy back these shares at the prevailing Net Asset Value Per Share. While the law provides that the redemption proceeds must be given with seven (7) banking days from teh date of the redemption request, most funds are able to pay the redeption proceeds with 2 to 3 days. Mutual funds are, therefore, considered very liquid investments.