Shift surplus money to liquid funds now

Annual returns of top performing liquid funds are 7%-plus

- SAIKAT NEOGI

WITH BANKS REDUCING interest rates on savings accounts, investors should consider liquid funds for better returns with low risk. These funds invest in short-term debt and money market instruments, offering relatively stable returns along with high liquidity.

Liquid funds invest in instruments with maturities of up to 91 days, allowing them to quickly adjust to new interest rate conditions while minimising volatility. This gives them a natural advantage when interest rates are falling, as the reinvestment happens at prevailing lower rates but without significant capital loss.

While banks are offering 2.75-3% for savings account balances of up to ₹50 lakh, returns from top performing liquid funds are around 3.7% for six months, and 7.3% for one year. Although there is no mandatory lock-in, many funds apply a small exit load if redeemed within seven days.