Liquid Term

What Is Liquid Term (Lt)?

Liquid Term estimates the number of years you could live on your liquid assets at your current spending, assuming no growth, taxes, or inflation. This includes cash and after-tax investments.

How Is Liquid Term (Lt) Calculated?

Why Is Liquid Term (Lt) Important?

Keeping adequate liquidity means having enough money in the bank and/or after-tax accounts to weather the unexpected or pursue the next stage of growth in your clients’ lives.

Without adequate liquidity, clients can feel more stressed about day-to-day decisions and become less able to see the big opportunities in front of them.  Maintaining the right amount of liquidity can help them feel less anxious about their finances in turbulent times and give them the confidence they need to live in the moment.

However, as in all things, finding balance is critical. There are certainly times where clients might need to be willing to sacrifice some liquidity for the right investments and opportunities.

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