Liquidity risk can be a risk worth taking

Liquidity risk doesn't get a lot of attention, says Matthew Partridge. But properly understood, it can boost your returns.

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Don't get caught out of liquidity dries up
(Image credit: SteveAllenPhoto)

Investing involves many risks. Volatility (the frequency and magnitude of price movements) is one form of risk. Credit risk the danger of a company going bust is another. One type of risk gets far less attention than either of these. Yet understood properly, it could help you to boost your returns or avoid big mistakes. We're talking about liquidity risk. Liquidity refers to how easilyyou can buy or sell a given asset.

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Dr Matthew Partridge
Shares editor, MoneyWeek

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

Follow Matthew on Twitter: @DrMatthewPartri