You have heard about Mutual Funds Advisory Portal. They are Investment vehicles consisting of some money collected from many investors to invest in stocks and bonds and such other securities. Among mutual funds, in the debt category, there are liquid funds. Investing in short term market instruments like treasury bills, government securities and call money, they are favored by retail investors due to their higher returns compared to a savings account. [Get Personalized Advice On Mutual Funds Visit]
If you have surplus money that you don’t want to lock in fixed deposits, liquid funds is where you should go. If you keep a savings account only, you won’t get many returns. In today’s time, keeping just a savings account isn’t sufficient. You have to invest in order to beat inflation.
When should I invest in liquid funds?
Investors avail the opportunity to use liquid funds to park their money for short intervals ranging from 24 hours to 90 days. For instance, Beryl wants to take a vacation in 3 months and is saving money for the same. If you were Beryl, you could save that amount in in a liquid fund.
Id you know that a good number of equity investors utilize liquid funds for staggering their investments into Equity Mutual Funds making use of the Systematic Transfer Plan (STP) due to their belief that this process brings forth higher returns and thus they can beat volatility over certain intervals of time? [Get Personalized Advice On Equity Mutual Funds Visit]
What is the speed of the redemption of such funds and what returns can I anticipate?
The instant you provide the redemption request before the cut-off time on a working day, the money can be expected to reach your bank account be the next working day. No entry and exit loads by fund houses will be there in liquid funds. The category of liquid funds, according to Value Research Data, has provided a return of 6.84% in the last one year, which is higher than what was offered by banks in their savings accounts (3.5-6%).
What’s the level of risk?
As per Financial Planners and Financial Advisers, liquid funds carry minimal risk combined with lower volatility compared to any other category in Mutual Funds. The cause of this is that they invest usually in high credit rating and their NAV (Net Asset Value) changes to the extent of interest income accrued including on weekends.
If you hold a liquid fund for more than 3 years, it is eligible for long term capital gains tax with indexation and in case you sell it before 3 years you have to pay tax as per your tax slab. By opting for the dividend option, the fund will be contingent on dividend-distribution tax of 28.84%
For more information visit www.moneymindz.com India’s First Free Financial Advisory or give a missed call to 022-62116588