AT New Delhi [India], June 1: Investing in mutual funds has gained immense popularity in the last few years. Among the various types of mutual funds, liquid funds have emerged as a highly preferred option for many people. Liquid fund is a type of debt mutual fund that invests in securities with short maturity periods. They are one of the safest investment options in the matua fund category. The value of liquid funds is less volatile than other fund types, making them one of the best investment options to achieve short-term goals.Here are the top five benefits of investing in liquid funds for short-term financial goals – *Highly Liquidated Liquid Funds
As the name suggests, these are extremely liquid. This feature of liquid mutual funds ensures that your invested funds can be easily converted into cash. A key feature of liquid fund investing is that you as a retail investor can redeem your investment at any time without any exit load, the redeemed amount is usually received in your bank account within 24 hours. This high liquidity makes liquid mutual funds an ideal choice for creating a contingency fund or mitigating unexpected short-term expenses. * Low Risk A fundamental advantage of investing in liquid funds is the low risk associated with them.Liquid funds mainly invest in debt instruments such as government securities, treasury bills and bonds with maturity periods up to 91 days. This short maturity period significantly reduces the interest rate risk. Furthermore, these funds invest in high-credit quality instruments to ensure low credit risk. Therefore, compared to other mutual fund investments, liquid mutual funds are considered less risky, making them an attractive option for conservative investors. * Stable Returns Although liquid mutual funds may not give high returns like equity or hybrid mutual funds, they are known to give stable returns.Returns on liquid funds are relatively less volatile and predictable compared to equity funds. This stability in returns makes them an ideal financial instrument if you are a low-risk investor and want to park your surplus money for a shorter period of time, thereby earning better than savings account interest. * No lock-in period Unlike typical types of mutual fund investments with lock-in, liquid matua funds benefit from no lock-in. This feature allows you to enter and exit the fund at your convenience. This flexibility allows you to manage your investments in a way that best matches your short-term goals and liquidity needs.* SIP Investment Route An important advantage of liquid funds is the availability of the SIP (Systematic Investment Plan) route. With the help of online SIP calculator
, you can easily calculate the amount you need to invest over a period of time to achieve your short-term goals. This disciplined approach to investing not only helps me develop a regular habit but also helps me average out investment costs potentially increasing overall returns. Ending Knot Liquid Fund is a useful financial product for you as an investor if you want to achieve your short-term goals due to its high liquidity, stable returns and low-risk features. However, for long-term goals, you can consider adding large-cap funds or multi-cap funds from the equity mutual fund category to your portfolio for potentially higher returns.Note that every investment decision should be made based on your financial goals, risk appetite. level, and time frame of investment.It is always advisable to consult a certified financial professional or advisor before taking any investment decision.
As the name suggests, these are extremely liquid. This feature of liquid mutual funds ensures that your invested funds can be easily converted into cash. A key feature of liquid fund investing is that you as a retail investor can redeem your investment at any time without any exit load, the redeemed amount is usually received in your bank account within 24 hours. This high liquidity makes liquid mutual funds an ideal choice for creating a contingency fund or mitigating unexpected short-term expenses. * Low Risk A fundamental advantage of investing in liquid funds is the low risk associated with them.Liquid funds mainly invest in debt instruments such as government securities, treasury bills and bonds with maturity periods up to 91 days. This short maturity period significantly reduces the interest rate risk. Furthermore, these funds invest in high-credit quality instruments to ensure low credit risk. Therefore, compared to other mutual fund investments, liquid mutual funds are considered less risky, making them an attractive option for conservative investors. * Stable Returns Although liquid mutual funds may not give high returns like equity or hybrid mutual funds, they are known to give stable returns.Returns on liquid funds are relatively less volatile and predictable compared to equity funds. This stability in returns makes them an ideal financial instrument if you are a low-risk investor and want to park your surplus money for a shorter period of time, thereby earning better than savings account interest. * No lock-in period Unlike typical types of mutual fund investments with lock-in, liquid matua funds benefit from no lock-in. This feature allows you to enter and exit the fund at your convenience. This flexibility allows you to manage your investments in a way that best matches your short-term goals and liquidity needs.* SIP Investment Route An important advantage of liquid funds is the availability of the SIP (Systematic Investment Plan) route. With the help of online SIP calculator
, you can easily calculate the amount you need to invest over a period of time to achieve your short-term goals. This disciplined approach to investing not only helps me develop a regular habit but also helps me average out investment costs potentially increasing overall returns. Ending Knot Liquid Fund is a useful financial product for you as an investor if you want to achieve your short-term goals due to its high liquidity, stable returns and low-risk features. However, for long-term goals, you can consider adding large-cap funds or multi-cap funds from the equity mutual fund category to your portfolio for potentially higher returns.Note that every investment decision should be made based on your financial goals, risk appetite. level, and time frame of investment.It is always advisable to consult a certified financial professional or advisor before taking any investment decision.
