Download the ABCD app

Unlock Financial Tools, Investment Insights, And Expert Guidance – All In One Convenient App !

Visit Our ABCD Page

What is a
Liquid Mutual Funds?

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.

img

Advantages of Liquid Mutual Funds

Low risks

Being debt-oriented, liquid funds have low volatility risks and offer stable returns on your investment.

Emergency planning

With instant redemptions, liquid funds can be a good avenue to save for emergencies.

Cost-effective

With instant redemptions, liquid funds can be a good avenue to save for emergencies.

Easy Access to Funds

Get the ability to readily access their money, often with the option for same-day or next-day payouts upon redemption.

Explore liquid mutual funds

Most Popular

Our Life Insurance Plans

Aditya Birla Sun Life Medium Term Direct Plan Growth

  • Direct-Growth
  • Debt

Value Research Rating:

  • AUMAUM: 23427(Cr)
  • RISKRisk: Very High
  • MIN. INVESTMENT 500
  • 5 YRS RETURNS 33.32%
  • Invest (Per Month) ₹10000
  • Get (30 Yrs) ₹24,850*

*Projections/estimations is backtested using historical data.

Most Popular

Our Life Insurance Plans

Aditya Birla Sun Life Long Term Direct Plan Growth

  • Direct-Growth
  • Life

Value Research Rating:

  • AUMAUM: 23427(Cr)
  • RISKRisk: High
  • MIN. INVESTMENT 1000
  • 5 YRS RETURNS 33.32%
  • Invest (Per Month) ₹15000
  • Get (30 Yrs) ₹34,850*

*Projections/estimations is backtested using historical data.

HIDE COMPARISON

SELECT MORE TO COMPARE

SELECT MORE TO COMPARE

SELECT MORE TO COMPARE

SELECT MORE TO COMPARE

Liquid funds returns calculator

Check out the expected returns on your liquid fund investments. Use the Aditya Birla Sun Life Mutual Fund (ABSLMF) calculator for quick calculations.

REGULAR INVESTMENT

SIP

Invest systematically in regular amounts and build a corpus with a disciplined investing habit.

START SIP
ONE TIME INVESTMENT

Lump sum

Invest once with the facility of lump sum investing and save at your will. Time the market correctly and earn good returns.

INVEST LUMPSUM
INVEST AMOUNT
PERIOD
RETURNS
%

Total Amount Invested

0

after 30 years you will get a return of

0

Disclaimer: Projections/estimations is backtested using historical data.

TARGETED RETURN VALUE
INVESTMENT PERIOD
RETURNS

Total Amount Invested

0

after 30 years you will get a return of

0

Disclaimer: Projections/estimations is backtested using historical data.

ABCD - One app to build a diversified
investment portfolio

Invest in mutual funds online with the ABCD app and build your portfolio one click at a time.

  • Life Insurance
    A choice of different types of mutual fund schemes
  • Life Insurance
    Online investments with a fully integrated digital platform
  • Life Insurance
    Facility to switch, redeem and invest more from a single platform

Scan the QR code to download our Mobile App

image_1

Understanding Liquid Mutual Funds

  • What are liquid mutual funds?
  • What are the features of liquid mutual funds?
  • Things to keep in mind when investing in liquid mutual funds
  • What should be the investment horizon for liquid mutual funds?
  • What is the tax implication of liquid mutual funds?
  • What are the payout options?

What are liquid mutual funds?

  • 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.

What are the features of liquid mutual funds?

  • 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

Things to keep in mind when investing in liquid mutual funds?

• 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

What should be the investment horizon for liquid mutual funds?

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

What is the tax implication of liquid mutual funds?

Returns earned are taxed at your income tax slab rates

Dividends earned, if any, are taxed at your income tax slab rate

What are the payout options?

  • Dividend option

    Earn dividends on your investment at regular intervals

  • Growth option

    Accumulate the returns over the investment tenure and get a lump sum amount on redemption

Portfolio Track

Consolidate with Portfolio Track
  • Life Insurance
    Consolidate assets, liabilities
  • Life Insurance
    Track portfolio at fingertips

Credit Track

Easily check credit score with Credit Track
  • Life Insurance
    Decide wisely with credit stimulator
  • Life Insurance
    Get personalised loan offers
image

FAQs On Liquid Mutual Funds

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.

Other asset class funds

image

Equity Fund

Give your savings the growth they deserve. Invest in Equity Funds and unlock the potential of long-term growth

Know More
image

Fund of Funds

Mutual funds that invest in other mutual funds both in India and globally

Know More
image

Hybrid Funds

Get a mix of equity, debt and other asset classes for a diversified portfolio

Know More
image

Index Fund

Passively-managed mutual funds tracking a particular index

Know More
image

ETF Funds

Invest in funds listed and traded on the stock exchange

Know More