What can be better than a mutual fund that has no lock-in period and has better returns than a fixed deposi...
What can be better than a mutual fund that has no lock-in period and has better returns than a fixed deposit? Investors having a shorter time horizon with less risk appetite should consider having liquid mutual funds in their portfolio. Also, liquid funds offer a huge margin of safety that helps in capital preservation and growing capital consistently over time with less volatility.
What is liquid fund?
Liquid fund is a kind of mutual fund that invests in securities. The residual maturity of a liquid fund is up to 91 days. And the most prominent feature of liquid funds is that there is no lock-in period.
Although an assured sum of return is not guaranteed with liquid funds, the investor will still benefit a lot from these than from fixed deposits. If you think liquid funds are a risk, think twice because they have the lowest risk involved in interest rate as compared to all other debt funds, the reason being liquid funds are an investment in fixed home securities. Also, there are no entry and exit loads in liquid funds.
Liquid funds are the best choice for investing for short term, especially when you are planning to do it in a high inflation rate scenario. While investing, you can choose among a variety of plans suitable for every need.
Still confused about liquid funds? This video will perfectly explain you the concept and also the pros of investing in liquid funds.