Earn interest up to 6% p.a on your current account balance with help of liquid funds and that too with the security of big fund houses like SBI, ICICI, HDFC, Kotak, LIC, etc. In this article today we would come to know the full method and know- how to do it!
It’s important and advisable to keep some liquidity with us to solve some short term future needs. One of the methods to keep the cash with us as a business is to keep it in our current account, but the problem is, it gives us zero percent return on our deposited capital. Today after reading this blog you would come to know about a better option where you can keep your cash with liquidity and earn interest up to 6% p.a. also. Surprisingly, it’s almost as safe as cash too! Let’s know it better, come ahead with me!
Liquid Assets
The concept I am going to talk about here is not unique. Before discussing it further, let’s understand the concept of liquid assets. A liquid asset is an asset that can easily be converted into cash within a short amount of time. In such assets what can easily be expected is confidence, guarantee, security, liquidity, etc. The liquid assets can include cash itself, liquid funds, short term bonds, account receivable inventories, etc.
Liquid Funds
Today out of all liquid assets categories, the main focus would be on the liquid funds. Liquid funds are short term mutual funds that invest in short term securities with tenure of upto 90 days. This short term expiry of such bonds reduces the risk of the overall fund and your capital deposited there too.
In business, liquid assets are important to manage and are crucial for both internal performance and efficiency outside too. A company with more liquid assets has a greater capability of paying debt obligations as they become due and also have a greater position and chance to catch any stellar instant opportunity. Always maintain a liquid reserve in your account. This is definitely going to help you. Keeping cash is one aspect and now come ahead and keep some liquid assets with you in the form of a liquid fund. Now tighten your seatbelt and we will learn this new concept and know exactly how to do it stepwise.
Step by Step Guide to invest in Liquid Fund
Before starting you would need to know that your capital kept in a liquid fund is managed by your Asset Management Company ( AMC) from HDFC, SBI, ICICI, UTI, LIC, Kotak and so on based on your choice. They take care of your funds and manage on your behalf. Before starting to deposit your funds with them in their liquid funds you would need to open an account with them.
If you are sure you can open an account with any reputed AMC but if you are not sure and thinking to be open to different options of AMCs you can do so by opening an account with any stock brokers like Zerodha, Groww, etc. You can invest through them without paying any extra penny and at the same time open to different options to invest with.
- Open your Folio (Folio with fund houses or AMCs is similar to bank account opened for deposits) with any fund house like SBI, ICICI, LIC, etc either directly or through brokers
- Complete your KYC process.
- Start depositing, and earn interest on your liquid cash.
- Redeem your fund and you can get it credited instantly: 90% the same day and the rest 10% the next day, in your bank account.
Know the risk of Liquid Funds
The whole fund put here is almost 100% risk free because the money kept in the liquid fund is invested in short term debentures and bonds of companies usually less than 90 days even. This reduces the risk of your money being lost or depreciated. So what are you waiting for? Take second advice from your financial advisor and enjoy the lucrative benefits of Liquid Funds.
Open an account with brokers like Zerodha, Groww, etc to be able to switch between different fund houses at your choice without doing the account opening process again and again! Thankyou for reading so for, meet you in the next blog soon! Till then, watch this video by Pranjal Kamra to understand it even better!
