Securing Hannav Ledger...
Securing Hannav Ledger...
Glossary
Liquid fund invests in very short-term debt and money market instruments with maturity up to 91 days, prioritising capital preservation and liquidity.
Liquid funds are for parking spare cash — almost like a savings account but with slightly better returns and T+1 redemption.
SEBI limits liquid fund portfolio to high-quality short instruments. Low duration minimises interest rate sensitivity. Used for emergency funds, STP source, and temporary cash parking. Not a substitute for insured bank deposits for entire net worth.
Keep ₹1.5 lakh emergency corpus in a liquid fund earning ~6.5% versus 3% savings account — roughly ₹5,250 extra annual interest on the buffer.
Most offer instant redemption up to ₹50,000 or 90% of folio per AMC, with full redemption credited T+1 business day.
Low risk but not zero. Rare credit events and rate moves can cause small negative daily returns.
Overnight funds hold securities maturing in one day — even lower duration and typically lower return than liquid funds.