Table of Contents
- 1 Should I park my money in liquid fund?
- 2 Which is better liquid fund or overnight fund?
- 3 Where can I park money safely?
- 4 Do overnight funds have exit load?
- 5 Which is the safest liquid fund in India?
- 6 Are overnight funds safer than liquid funds?
- 7 Should you park your emergency or contingency corpus in liquid funds?
Should I park my money in liquid fund?
Liquid funds are an excellent option to park your idle money. These are low-risk havens that offer higher returns than a regular savings bank account. These funds don’t have a lock-in period. You can use liquid funds as a regular savings account and earn higher returns.
Which is better liquid fund or overnight fund?
Overnight Funds are preferable for parking your surplus cash for less than a week as they have no exit load. Liquid Funds have a graded exit load upto six days and no exit load from 7th day. Thus, they can carry higher credit risk than Overnight Funds.
How safe are overnight funds?
Safest Debt Fund: Overnight funds are the safest among debt funds, with zero interest rate risk and minimum credit risk. Overnight funds have near-zero credit risk too‐ as it is highly unlikely for securities maturing in one day to default on interest payments.
Is liquid funds safe?
Although liquid funds are not entirely risk-free, however, they are low risk-low returns instruments. As they invest predominantly in debt instruments, they are subject to interest rate risk and credit risk. Liquid funds ensure that your money is invested only in superior creditworthy instruments.
Where can I park money safely?
Here are a few of the best short-term investments to consider that still offer you some return.
- Savings accounts.
- Short-term corporate bond funds.
- Money market accounts.
- Cash management accounts.
- Short-term U.S. government bond funds.
- Certificates of deposit.
- Treasurys.
- Money market mutual funds.
Do overnight funds have exit load?
Exit load is charged on the investments in liquid funds if redeemed within seven days from date of investment and for overnight funds the exit load is nil. As such, these funds are preferred for parking short-term surplus funds and for maintaining the emergency fund corpus.
Which index is most suitable for overnight fund?
Best Overnight Funds to Invest in 2020
| Fund | AUM (in Crores) | Link |
|---|---|---|
| SBI Overnight Fund | 8,050 | Invest Now |
| HDFC Overnight Fund | 9,765 | Invest Now |
| UTI Overnight Fund | 2,802 | Invest Now |
| Edelweiss Overnight Direct Fund | 695 | Invest Now |
Is liquid fund risk free?
Returns of Liquid Funds vs Saving Account Although liquid funds are not entirely risk-free, however, they are low risk-low returns instruments. As they invest predominantly in debt instruments, they are subject to interest rate risk and credit risk.
Which is the safest liquid fund in India?
Top 10 Liquid Funds In India For 2021
| Fund Name | 3 Year Returns | 5 Year Returns |
|---|---|---|
| Axis Liquid Fund | 6.21\% | 6.61\% |
| ICICI Prudential Liquid Fund | 6.17\% | 6.58\% |
| IDFC Arbitrage Fund | 5.37\% | 5.66\% |
| Principal Cash Management Fund | 2.76\% | 4.53\% |
Are overnight funds safer than liquid funds?
In summary, compared to liquid funds (which is the debt fund category closest in risk-return terms), overnight funds are relatively safer. Low cost: Overnight funds are low-cost debt funds, mainly because their debt holdings are not managed actively. In practice, most overnight funds operate with expense ratios below 1\%.
How much should I invest in overnight funds?
Overnight funds carry low risk, even when compared with liquid funds. You can consider investing 40\% (Rs 2 lakh) each in Axis Liquid and SBI Liquid and the rest in HDFC Overnight. Opt for the growth plans of the suggested funds.
Should you invest in liquid mutual funds?
If you’re thinking of parking your money for the short term, you can also consider liquid mutual funds. Liquid funds are an ideal alternative to fixed deposits because that they invest in low-risk debt and money market securities.
Should you park your emergency or contingency corpus in liquid funds?
Hence investors can park an emergency or contingency corpus in a liquid fund, with the assurance that it will be safe and can be redeemed when necessary. Liquid funds are cash management products that are designed to keep funds safe while earning a small return.