Liquid Funds (Mutual Funds)
Liquid Mutual Funds for Safe and short investment:
Looking to invest in Mutual funds but not sure of where to start with?
Start with the Liquid Funds also known as the Debt mutual funds/ Short term funds/ Ongoing type of Mutual funds, safe for investment.
In Liquid Funds, the money is invested in very short-term market instruments like government securities, term deposits, etc.
Liquid funds are the safest funds and the average maturity period of these kinds of funds is equal to or less than 90 days with average returns between 6 – 9% depends on the company to company.
Liquid Mutual Funds have almost no risk but provide low returns compared to ELSS, Equity, and Balanced funds but higher returns compared to bank deposits like FD and RD.
Planning to invest but not aware of how to invest in liquid funds, then try investing through the third party Applications by investing the amount in SIP (Monthly) or Lumpsum (One time).
Features of Liquid Mutual Funds:
- Full or partial withdrawal is possible with no exit load in these kinds of funds.
- You can invest an amount as low as 1000rs (Lumpsum) to start within Liquid mutual funds.
- If you need to withdraw money anytime then the amount will be credited within 30mintues of the redemption request hence they are the safe investment.
- Liquid mutual funds have zero exit load (except the first 7 days of the amount invested as per the new update) and the person can withdraw the money anytime as it has no lock-in period like ELSS funds or other TAX saving investment.
You can also check the mutual funds, performance, and returns through an online mutual funds calculator before investing the amount in Liquid Mutual funds.
Disadvantages of liquid funds:
- Manly liquid funds are risk-free but this leads to the disadvantage of Low returns compared to other mutual funds,
- Also, you can withdraw the money instantly within 30 minutes but not the full amount, few companies allow only around 60-80% of the invested amount to withdrawn instantly and rest like normal withdrawal in 2-3 working days.
These kinds of mutual funds are ideal to keep your spare money and get some good returns.
Let’s see a few Liquid funds offering mutual fund companies:
- HDFC liquid funds
- Reliance liquid fund
- Axis liquid fund
- Icici liquid fund
- SBI liquid fund
List of Best 5 Liquid Funds to Invest in 2020 (Source: Paisabazaar)
| Fund Name | AUM (cr.) | 1 Year Returns | 3 Year Returns | 5 Year Returns |
| Aditya Birla Sun Life Liquid Fund | ₹40,835 | 6.70% | 6.99% | 7.43% |
| Axis Liquid Fund | ₹29,119 | 6.61% | 6.98% | 7.39% |
| Nippon India Liquid Fund | ₹24,235 | 6.69% | 7.00% | 7.42% |
| Franklin India Liquid Fund | ₹12,529 | 6.85% | 7.07% | 7.49% |
| Baroda Liquid Fund | ₹6,071 | 6.62% | 7.00% | 7.46% |
If wants little more returns and ready to take some risk, try investing in Equity funds and Balanced mutual funds.
If you want to invest only in a safe way to get fewer returns but sure/safe returns, invest in liquid mutual funds.
If funding difficulty in investing in the mutual funds you can use third-party applications also like Coin-zerodha, ET Money, Mycams, Fisdom etc to invest in mutual funds and they help to choose the right funds as per needs.
Also, Read at knowandask:
Balanced funds also called hybrid funds.
Equity Mutual Funds – High Risk but High Returns.
ELSS Mutual Funds [Equity Linked Savings Scheme] save Tax While Creating Wealth.
