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Debt Liquid Redemptions

A software engineer who maintains a cash reserve asks if he should park some of it in a debt liquid fund

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.

In case you opt for liquid funds, go for well rated ones like Canara Robeco Liquid, Escorts Liquid or HDFC Cash Mgmt Savings.

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