Ask Value Research

Liquid Over Savings

Compared to bank savings accounts, liquid funds are tax-efficient & offer better returns…

I have Rs 50,000 in my savings account. Should I transfer the amount to liquid fund to get better returns and liquidity or should I keep it in my savings account itself ?
- Deepa

Compared to bank savings account, liquid funds are tax efficient and hence offer better net returns. These funds invest in debt-and money-market instruments like certificates of deposit (CDs), commercial paper and treasury bills. It is for this reason that these funds are an ideal vehicle for parking funds before a final and long-term investment decision is made and can be handy if money is needed at short notice. You can consider investing in Principal Cash Management or JM High Liquidity Regular funds.

This article was originally published on May 18, 2011.

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