Scheme type
AMC
Risk appetite
Rating
Returns
Frequently asked questions
Are liquid funds good for the long term?
Liquid funds are more suited for short-term investments due to their focus on stability and liquidity rather than long-term growth potential.
Is it wise to invest in liquid funds?
Investing in liquid funds can be wise for short-term financial goals or as a parking place for emergency funds. That is because these funds are stable and highly liquid.
Is liquid fund tax-free?
No, liquid funds are not tax-free. They are subject to taxation based on the investor's income tax slab and the holding period.
Are liquid cap funds high-risk?
Liquid cap funds are low-risk investments. That is because they invest in short-term, high-quality debt instruments.
What kind of returns can I expect from liquid funds?
Returns from liquid funds typically range between 3-5% annually, depending on market conditions and interest rates. While they offer lower returns compared to other funds, they provide stability and are ideal for short-term parking of funds.
How much should I invest in liquid mutual funds?
The amount you invest in liquid funds depends on your short-term liquidity needs. It is ideal for emergency funds or for those looking to park surplus cash with minimal risk and easy access.
How quickly can I redeem my investment in Liquid Funds?
Liquid funds offer high liquidity, allowing you to redeem your investment within 24 hours on business days. In some cases, the redemption is available instantly, providing quick access to your funds.
What is the typical expense ratio for Liquid Funds?
The expense ratio for liquid funds is typically low, ranging between 0.05% to 0.50%. It varies depending on the fund manager and fund size, making liquid funds a cost-effective option for short-term investments.
Is liquid fund better than FD?
Liquid funds offer better liquidity and slightly higher returns than Fixed Deposits (FDs) in many cases. They are ideal for short-term investments, whereas FDs are more suitable for those looking for guaranteed returns over a longer period.
Are liquid funds 100% safe?
While liquid funds invest in low-risk securities, they are not 100% risk-free. Interest rate fluctuations and credit risks exist, but the risk level is minimal compared to other funds.
Are liquid funds safe during a recession?
Liquid funds are relatively safe during a recession because they invest in short-term government securities and high-rated debt instruments. However, in extreme cases, market volatility could affect returns, though the risk remains low.
Does liquid funds beat inflation?
Liquid funds generally do not outperform inflation consistently. They offer stable returns, but their rate of return typically hovers around or slightly above inflation, making them more suited for short-term, low-risk investments than wealth generation.
