I need some advice on contingency planning and would like to spare Rs 1.5 lakh towards this. I have Rs 50,000 in a 1-year fixed deposit offering 6.5 per cent per annum. I am looking for some liquid funds which will assure me a better return than a fixed deposit.
- Alok Arora
While a fixed deposit has the reliability of an assured return, liquid funds score on liquidity and the possibility, not guarantee, of a higher return. The 1-year return of this category as on March 10, 2010 was around 4 per cent (category average). In the case of a liquid fund you would be able to avail of the redemption proceeds after a day.
Distribute your money between liquid funds and a bank fixed deposit. However, you could also park your money in a bank flexi deposit. This enables you to earn interest higher than what is offered in a savings banks account. Should you need to withdraw some money, you can do so without breaking the entire deposit.