Liquid Funds Offer: Keeping money in a savings account is no longer as profitable as it once was. Many major banks, such as SBI and HDFC Bank, have reduced their savings account interest rates to just 2.5%. In contrast, liquid funds offer investors potential returns of up to 6-7%. This is why investors are turning to liquid funds for their temporary funds.
Why Liquid Funds Are Better
Liquid Funds Offer are a category of mutual funds where money is invested in short-term investment instruments. This reduces risk and provides investors with better interest rates than a savings account. Deposits can be withdrawn at any time, making them as liquid as a savings account but yielding higher returns.
SIP and Investment Strategy
Systematic Investment Plans (SIPs) involve investing in mutual funds every month or at fixed intervals. However, it often happens that the remaining money after the SIP is deducted remains in the savings account without earning any significant interest. Due to inflation, the real value of this money decreases over time.
Importance and Uses of STP
Systematic Transfer Plan (STP) is a solution to this problem. In this, the remaining amount is first invested in a Liquid Funds Offer and then transferred to a selected mutual fund or equity fund at a fixed time. This way, the investor earns higher returns than a savings account and their portfolio grows in a balanced manner.
Tips for Investors
It may be wise to use liquid funds instead of leaving the money in a savings account. This not only improves returns but also strengthens your SIP strategy. However, every investor should take any step keeping in mind their financial goals and risk appetite.
Disclaimer: This article is for general information and educational purposes only. Do not construe the information provided here as investment advice. It is important to consult your financial advisor before investing.
