I am a regular reader of your magazine. I have a query regarding Debt Liquid funds. I am a Software Engineer and I normally maintain a cash reserve to cover three months of my expenses (in case of an emergency). Is it a good idea to park a part of this cash reserve in some 5-star rated Debt Liquid fund? If it is a good idea then please suggest some good funds.
- Manikandan Chellappan
If you are seeking instant access to your money in an emergency, then it is desirable to have your money in a deposit linked to a bank else you can go for a liquid fund. While you can immediately withdraw your money from a savings bank account, redemption in a liquid fund takes T+1 day i.e. 24 hours. If there are any holidays or non-trading days, then the redemption will be delayed by that many days. Therefore, your selection will depend on the urgency of access you are looking for.