Investing in Liquid Funds : A better Saving approach

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Liquid Funds: Better than a Saving Account

investing in Liquid Funds

1.1 What are Liquid Funds?
1.2 Who should Invest?
1.3 Annual Returns
1.4 Fees and Expenses
1.5 How to Invest
1.6 Summary


What are Liquid Funds?

    Liquid funds are some special types of mutual funds. They invest in securities with a maturity of up to 91 days. These Schemes invest in financial instruments such as Fixed deposits, Treasury bills, Commercial Paper, and other debt securities.
This special type of funds allows withdrawal within 24 hours. This is the best alternative for your money lying in saving accounts. 
    
    These funds are targeted to provide higher returns than bank accounts while offering a similar level of security for the money invested.


Who should Invest?

Liquid funds are safe and they provide liquidity but not higher returns compared to direct equity investments.
It is advised that investors looking to park their idle money should consider a liquid fund as the best option for investment 

Annual Returns:

Liquid Funds Generate around 8% to 9% returns, and however should definitely be preferred over savings account which provides 4% Returns.

Fees and Expenses:

Liquid Funds are free from any entry and exit load charges. However, TER is the expense we have to pay while redeeming the invested amount like we do for all other mutual funds.


How to Invest:

For investing in Aditya Birla Sun Life (ABSL) Liquid funds we can use Active Account App.
Instant activation with PAN and Bank Account Details.


Stay tuned for my next blog 
How to invest in ABSL Liquid Fund

We can use Paytm Money, Freecharge, PhonePe, ETMoney for investing in various types of liquid funds.
But FinAjinkya recommends Direct investment with the Asset Management companies website or an app.

Top Funds to invest:

ABSL Liquid Fund
Nippon India Liquid Fund
Axis Liquid Fund
HDFC Liquid Fund
ICICI Prudential Liquid Fund

Summary: 

  • Short term maturity funds with that yield fixed returns
  • They offer High Liquidity
  • No Entry and Exit Load (after 7 days of withdrawal)
  • Very Low Risk
  • Best Suited for short term goal of 5-6 Months
  • The optimum solution to park idle Cash
  • No Lock-In Period 
  • Instant Redemption of the amount within a few minutes

Want to start your first SIP, check this out:


Stay tuned for the upcoming blogs on

"Start your first SIP with SBI Mutual Fund.."
"Start your first SIP with HDFC Mutual Fund.."

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