The NBFC crisis has brought liquid funds back in favour as they carry lower risk than corporate FDs.
When should you invest in liquid funds?
Financial planners suggest investors should use liquid funds to park money for short periods of time typically 1 day to six months. You can also use this for short term goals like saving money for a vacation to be undertaken in the next 3-6 months, or for a tuition fees. Many equity investors also use liquid funds to stagger their investments into equity mutual funds using the systematic transfer plan (STP), as they believe this method could yield higher returns and help them beat volatility over an period of time.
What returns can an investor expect?
Investors can redeem their investments and the money reaches their bank account on the next working day. There is no entry or exit load by fund houses in liquid funds. As per Value Research data, the category of liquid funds has given a return of 6.94% over the last one year. This is higher than the 3.5-6% offered by banks on their savings account.
We never know what the end of a new road holds. Explore it. Find out what it is. But we must always remember to let our expectations meet reality with humility. Then the beauty of the adventure will never disappoint. ⛰🧭