Unlock Financial Tools, Investment Insights, And Expert Guidance – All In One Convenient App !
Visit Our ABCD PageHealth Insurance
Housing Finance
Life Insurance
Mutual Funds
Personal Insurance
SME Finance
Stock & Securities
A liquid mutual fund is a debt-oriented fund which invests in securities that have a maturity period of up to 91 days. They are short-term investment avenues that offer stable investment returns.
Check out the expected returns on your liquid fund investments. Use the Aditya Birla Sun Life Mutual Fund (ABSLMF) calculator for quick calculations.
Invest systematically in regular amounts and build a corpus with a disciplined investing habit.
START SIPLump sum
Invest once with the facility of lump sum investing and save at your will. Time the market correctly and earn good returns.
INVEST LUMPSUMTotal Amount Invested
₹ 0
after 30 years you will get a return of
₹ 0
Total Amount Invested
₹ 0
after 30 years you will get a return of
₹ 0
Invest in mutual funds online with the ABCD app and build your portfolio one click at a time.
Scan the QR code to download our Mobile App
Liquid mutual funds are open-ended debt funds which invest their portfolio in money market instruments or securities with a maturity of up to 91 days. Liquid funds are short-term investment avenues which offer quick redemptions.
Park your surplus funds for a short tenure and earn good returns
Low interest rate risk since the maturity of the underlying portfolio is short-term
There’s no capping on the maximum investment amount
Returns from liquid funds range in the 6% to 8% limit
No exit load is charged if redeemed after 7 days of investment
• Liquid funds are not completely risk-free. There’s some element of credit risk
• Redemptions within the first 6 days would attract an exit load
• Check the expense ratio of liquid schemes. Though the ratio is low, choose a fund which has the lowest ratio for maximum investment
• Compare liquid funds on their returns too. A fund with the highest return is better
Liquid funds invest in securities with a short maturity period
Hence, they are suitable for short-term investments
If you want to park your surplus funds for a week or more, you can choose liquid mutual funds
You can invest your emergency corpus in liquid funds and stay invested for as long as you want
Returns earned are taxed at your income tax slab rates
Dividends earned, if any, are taxed at your income tax slab rate
Earn dividends on your investment at regular intervals
Accumulate the returns over the investment tenure and get a lump sum amount on redemption
The returns from liquid funds are comparable to those from short-term fixed deposits. Liquid funds also offer benefits such as no lock-in period and no exit load after 7 days. So, liquid funds are better if you want liquidity and better returns. However, the returns from liquid funds are not guaranteed, while fixed deposits offer assured returns.
Online investment in liquid funds is safe if you choose a reputed platform, like ABCD, to invest.
No. Liquid funds are better known as short-term investment options, especially if you want to park your surplus funds for a short time before they come to use or are invested elsewhere for the long term. For long-term investments, you can choose long-term debt funds and benefit from higher returns.
Yes, liquid funds are a good option for parking emergency funds because of their high liquidity and relatively higher return potential than savings accounts and fixed deposits
Liquid funds invest majorly in short-term debt instruments, while debt funds invest in various debt securities across time horizons.
While liquid funds are popularly known as more or less stable investments, they may provide negative returns if the debt instruments they invest in underperform.
Liquid funds are safe as they are strongly regulated by the SEBI and managed by expert fund managers.
As for the risk factor, it is said to be almost zero (but NOT zero) about capital safety if you stay invested for a good amount of time. Hence, these are some of the least risky mutual funds in the market.
No, as liquid funds are market-linked investments, they do not offer guaranteed returns or principal amount safety.
Liquid funds generally offer better returns than savings accounts if you stay invested for a good period. Savings accounts have a fixed rate of return, while liquid fund returns can appreciate with market performance.
There is no lock-in period or minimum investment tenure for a liquid fund. You can stay invested for as short as a day.
• Investors with a short investment horizon - Liquid funds invest in securities with shorter maturity terms, so they can be good for investors with an investment horizon of up to 3 months.
• Investors who invest in bank deposits: Investors used to bank deposits may consider liquid funds instead for a chance at higher returns and higher liquidity.
• Investors who want to keep contingency funds: With the assurance that your corpus is safe and ready-to-withdraw when necessary, liquid funds can be a good option to park your contingency funds.
• Investors who need to park funds temporarily: Because of the short-term nature of liquid funds, they can be an appropriate option for parking money temporarily while earning some returns out of it as well.
• Medium to route investments in equity funds: Short term investments in liquid funds can easily be routed periodically to equity investments through Systematic Fund Transfer (STP).
Yes, liquid fund gains are taxed as capital gains (long-term and short-term). In case of short-term or funds held for less than 36 months, your income tax slab becomes applicable. In case of more than 36 months of holding, the tax rate is 20%.
Yes, investors can invest in liquid funds through SIP
Yes, there is an exit load on liquid funds but only if you redeem them within 7 days of investing.
Risks - It is important to note that although liquid funds are low-risk, they are not risk-free. They do carry credit risk.
Returns - Liquid funds have been known to provide approximately 7% p.a. returns on an average. Evaluating fund performance will also give you a clearer idea of what to expect.
Expense Ratio - The annual fee charged by your fund house for their fund management services is called the expense ratio. Lower the ratio, higher the returns.
Investment Plan - Liquid funds have an ideal investment horizon of up to 3 months. So, think accordingly and invest as per your financial goals.