The Price of Liquidity

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10 MIN READ

A liquidity premium is a term that describes the amount of money you get paid to lock your money up for a period of time. If you are giving up liquidity, or your ability to sell your investment for cash, you should be compensated. And this makes sense – because by locking up your money, you are exposing yourself to market risks and/or opportunity costs that wouldn’t exist if your money was readily available.