Liquid net worth: the figure that actually answers the “can I” questions.
Total net worth includes assets you cannot realistically deploy in a financial emergency. Liquid net worth strips those out. The gap is often the difference between “wealthy on paper” and “wealthy in practice.”
The liquidity hierarchy
Assets convert to cash at very different speeds and at very different cost. The hierarchy from most to least liquid:
| Asset class | Time to cash | Cost / haircut |
|---|---|---|
| Cash, bank deposits | Same day | 0% |
| Money market funds | 1 business day | 0% |
| Listed equities, ETFs | T+2 | 0.1–0.5% (spread + commission) |
| Bonds (liquid issues) | T+2 | 0.2–1% (spread) |
| Term deposits (early redemption) | 1–5 days | ~0.5–1.5% (interest forfeit) |
| Crypto (major coins) | Same day | 0.5–2% (spread + withdrawal) |
| Real estate | 3–6 months | 5–10% (commission + holding cost) |
| Investment property (leveraged) | 3–6 months + tenancy | 5–12% + tax timing |
| Vehicles | 2–6 weeks | 5–20% (private-sale haircut) |
| Bonds (illiquid issues) | 2–8 weeks | 2–10% |
| Private business equity | 6–24 months | 15–40% |
| Retirement / super (preservation age not met) | Effectively unavailable | Tax penalties + condition-of-release |
| Collectibles, art | 1–12 months | 10–30% |
The 90-day rule
A practical definition of “liquid” that handles most household cases: could you have the cash in your bank account within 90 days, with less than a 5 % loss of value? If yes, liquid. If no, illiquid.
This rule classifies cash, equities, ETFs, liquid bonds, and money-market funds as liquid. It classifies real estate, vehicles, retirement accounts (pre-preservation-age), and private business equity as illiquid.
The retirement-account question
Retirement accounts are illiquid by design — preservation age in Australia is currently 60, US 401(k)/IRA early-withdrawal incurs a 10 % penalty plus ordinary income tax, UK pension access is age 55. Including super or 401(k) balances in a liquid net-worth calculation overstates flexibility.
For households more than ten years from preservation age, the realistic accessible liquidity is the taxable investment portfolio plus cash plus emergency fund — not the figure that includes super.
Why liquid net worth often diverges from total
Two example households, both with $750,000 total net worth:
| Household A | Household B | |
|---|---|---|
| Home equity | $500,000 | $50,000 |
| Super / 401(k) | $200,000 | $50,000 |
| Cash | $15,000 | $80,000 |
| Investments (taxable) | $45,000 | $580,000 |
| Credit card balance | ($10,000) | ($10,000) |
| Total net worth | $750,000 | $750,000 |
| Liquid net worth | $50,000 | $650,000 |
Both households are technically equally wealthy. They are not equally able to handle a six-month income disruption.
Implications for emergency fund sizing
Standard advice is “3–6 months of expenses” in cash. The advice is calibrated for households whose total liquid net worth is small — cash is the emergency reserve. Households with substantial taxable investment portfolios can run a thinner cash buffer because the portfolio is also accessible at low cost. The tracking page walks through how this informs household-specific cash-buffer choices.