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In the current market scenario, if you keep your money in the Saving Bank account, you will get interest approx of 3 to 3.5% maximum. Short-term Fixed Deposits have an interest rate between 5 to 6%.
Liquid funds are good to invest surplus money to get a better return than savings accounts or FDs. Liquid funds can be used to park your surplus funds for weekend or market holidays with constitutive redemption request on the next working day. So you can manage your fund's requirements as needed. There are no redemption charges/ withdrawal charges with liquid funds.
With liquid funds you don’t have restriction of time, you can invest your money for a minimum of 1 day also. Liquid Fund redemption charges are also NIL, interest earn on both the entities are taxable, easy redemption process in liquid funds. So, we can say liquid funds are better than FDs.
Other related questions
Are liquid funds better than FD? How liquid fund is better than FD? Liquid fund vs FDs, Liquid Fund vs saving bank interest. Which is better- Liquid Fund or FD?
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Zerodha Trade@20
