Why Liquid Funds are the Best Investment Options in India

You are bound to think of many ways to invest you money in such a crowded market. There are so many different options if you are thinking of making more money out of the money you have made and that is the best option most of us have today. It is vital to know the different ways you can make money today by just investing the money you have saved to make more money for you.

One of the most crucial investments you can make in your portfolio today is that of Liquid Funds. They help you earn a higher interest rate as compared to many other venues including saving bank accounts without compromising on the access to this cash.

The reason is that this fund concentrates or puts the investment mainly in the money market and that makes it easy to make an investment. The investments are mostly in the line of deposit certificates, or commercial papers, treasury bills and term deposits. The advantage is that there is a lower maturity period of assets like this and hence, as a fund manager – there is a quick method to dispose and create cash. So, what are the benefits of a liquid fund?

Well the first and foremost advantage is that there is no lock in period when you invest in such a fund. You can withdraw the money within 24 hours on a business day and the day is shut by 2PM on business days. So, if you were to request withdrawal before 2PM, the cash would e in your account by 10AM the following day. How easy and convenient is that? That apart there is the fact that no entry load or exit load is levied and that is quite a huge benefit because most other investment options charge it. You make a saving as compared to anything else, since this would be applicable everywhere else.

The returns that you get from a short term that has a scope of high inflation is really good and that is where the benefit really kicks in. Even if the inflation rates increase, you would be protected as the interest rates are higher and hence there is lesser liquidity – which means that the returns are good.

Liquid Mutual Funds also help in getting a quicker return as the shorter maturity it boasts of. Not just that, you get higher returns too from the fixed deposits offered from banks (which by the way, take a penalty if you withdraw prematurely).

Now that you know why you should choose a fund like this, you must also know how to purchase a fund like this. The idea is that these returns are not very different from other securities but the difference is that you have to think about the quality that the fund house brings along with the brand itself.  There is also a huge advantage of tax benefits that come by when you invest in such liquid fund India options. It would not only save you with your taxes today, but would give you a healthy return on investment year on year too.