Our five-step guide to choosing the right liquid mutual fund

Summary: When it comes to building your emergency corpus, liquid funds emerge as the go-to option. But how do you choose the right liquid fund? Here, we present to you a five-step checklist that guides you through the process of selecting a liquid fund suited to your needs. Stashing your emergency fund in a savings account is perhaps the most straightforward, no-brainer method. But it's not the best. Enter liquid funds; they do what a savings account does, but better. These funds match the safety of savings accounts and are easily accessible while offering higher returns. They invest in short-term money market instruments such as treasury bills, certificates of deposit and commercial papers, which typically mature within 91 days, underscoring their safety and stability. Since these funds also allow easy, quick redemption, they are ideal for meeting immediate, short-term financial needs. With 37 liquid funds managing a massive corpus of Rs 5.3 lakh crore, there are many picks to choose from. How do you pick the right one? Here's a five-step guide to help you make an informed decision: Step 1: Check the expense ratio The expense ratio, a fee charged by the fund f

This article was originally published on January 01, 2025, and last updated on December 26, 2025.