Investors must assess liquidity risks before committing funds

Investors should consider how quickly they can sell an investment before committing funds. Some investments, like annuities and non-publicly traded REITs, can have high penalties or restrictions that make it difficult to access cash quickly. Certain mutual funds may also limit transfer options, potentially triggering taxes. Private equity and venture capital funds require long-term commitments, often locking up funds for seven years or more. While these investments can be beneficial, understanding their liquidity risks is crucial. Investors should evaluate the potential costs and timelines for accessing their money.