Why Liquid Funds?
When it comes to secure surplus cash while escaping the tide of
eventuality, most of us prefer bank accounts. The intent is right; however, as
a thumb rule, you don't need more than a month or so of your income in your
bank account. Anything more and you are loosing out the opportunity to deploy
your funds better.
One should consider Liquid
Funds to fetch better returns within a short period of time. These
funds refer to a category that invests in a basket of different securities like
treasury bills, government securities, corporate paper securities and call
money that holds least amount of risk and high credit ratings. These funds can
invest upto a maturity of 91 days. Unlike other mutual funds, the NAV of liquid
fund is not volatile and the only change in their NAV is mostly as a result of
the interest income that across.
Here are the major benefits you get from Liquid funds
Return Efficient: No
longer waiting for achieving returns as you can be eligible to earn interest
from the date of the investment itself and thus minimize the overall return
leakage.
Effective Cash Management: Businesses
can park their daily surplus in liquid funds to earn interest on the same
rather than keeping in bank accounts.
Quick Withdrawal: Liquid
funds allows investors to withdraw a portion of their liquid money any time to
fulfil any kind of emergency requirements.
No Lock in Period: There
is no lock in period in liquid funds and hence give the instant access to funds
