Is it a good idea to keep the emergency corpus in liquid funds?
It is a very good idea to enhance the return on your idle money which you may need at anytime, without compromising on the convenience. The emergency money will be earning slightly higher return than your savings bank account and if you don't face any emergency over the next three years and the money lies there, all the returns would be virtually tax-free. Not only that, today it is possible to invest in a liquid fund and instantly redeem up to Rs 50,000 using your smart phone. For example, if you have an online enabled Aditya Birla Sun Life Mutual Fund active account with their app installed on your phone, you can simply request a redemption from the app, and the money (up to Rs 50,000) is transeferred instantly or in a span of 30 minutes to one hour.