Liquid funds are a part of debt funds. These funds invest in short term and long term guaranteed products such as Bonds, commercial paper, non convertible debentures, fixed deposits of banks, corporate fixed deposits and other cash equivalent products. These funds give a return which is closely adjusted to the average returns of the products that it has invested.
Advantages of liquid funds compared to fixed deposits
If an investor wants to invest in a fixed deposit for a duration less than 6 months in a bank, the bank gives a return less than 6% per annum whereas in a liquid funds close to 7% to 9% per annum return can be achieved even for a short duration of a day or two.
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What is a Liquid Fund ? Liquid Funds are a Type of Mutual Fund which invests in Fixed Deposits, Treasury bills, Commercial Paper. Generally Investments with less Maturity Dates. The Fund Manager can meet the Redemption request from the investors Since the Maturity Tenure in the Underlying instruments is less than 1 year or Redemption Request from the investors can…Read More
Commercial Papers are Financial Instruments which is borrowed by Large Companies ( eg: Tata Motors, Reliance Industries, L&T, BHEL, SBI, etc…) were the Tenure of Borrowing Money is more than 7 Days or Less Than 1 Year. The Borrowed Money is Used by the Companies for Managing there day to day Activities like Payroll, or New Company Acquisition, etc… Why…Read More