That’s one way it can come up, but it’s a more general issue. Suppose a different, better investment opportunity presents itself—you will only be able to take it if your existing investments are liquid. Or suppose your tax circumstances change. Or any manner of things.
Liquid investments only need to be the best investment right now to be worth taking. Illiquid investments also need to be better than hypothetical investments you might get over the term of he investment, and they need to remain worthwhile across a variety of circumstances. That is a much higher threshold.
This probably applies mostly when you do not have enough liquid assets to winter times that might force you to sell.
That’s one way it can come up, but it’s a more general issue. Suppose a different, better investment opportunity presents itself—you will only be able to take it if your existing investments are liquid. Or suppose your tax circumstances change. Or any manner of things.
Liquid investments only need to be the best investment right now to be worth taking. Illiquid investments also need to be better than hypothetical investments you might get over the term of he investment, and they need to remain worthwhile across a variety of circumstances. That is a much higher threshold.
Agreed. This is a nice qualification for the advice to focus on liquid assets.