What Are Liquid Funds?
Liquid Funds are kind of mutual funds that invest in fixed income market instruments with a maturity period of up to 91 days. It is very suitable for those who don’t want to block their investment amount in any kind of fund for linger durations and expecting fixed returns for their investments. The investment of liquid funds is done in treasury bills, deposit certificates, commercial papers, and other debt securities.
Liquid funds font come with a lock-in period which means one can withdraw money anytime time on the transaction will be reflected within 24 hours of application. No entry or exit loads are applicable to these funds with the major benefit of investing in these funds.
These are becoming the best funds to invest as some of the best performing liquid funds have the lowest risks, high credit ratings, and fixed returns with minimal lock-in and maturity period.
What Do Liquid Funds Provide In Return?
Liquid Funds have short term maturity periods providing liquidity to the mutual fund. It does not provide that much higher returns. Investors who are looking to invest their spare money are advised to invest in mutual funds but don’t invest the entire money that you have saved for emergency due to its quick withdrawal as it takes 24 hours to make transactions reflected in your account.
Liquid funds generate returns around 8%-10% depending upon the type its more than a normal savings bank account which is around 4%-6%. So preference must be investing in liquid funds. The risk factor of getting lost is quite low in this case.
Are Liquid Funds Safe To Invest?
Yes, investing in liquid funds is quite safe to deal with. It provides fixed interest rates and returns that low down from the risk of encountering loss on your investment. It offers high liquidity to the investors and suitable for those who don’t chase to get high credit risks.
Top 10 Best Liquid Funds
Now let’s talk about choosing the type of Liquid fund in which you need to invest. On the basis of various quantitative and qualitative parameters, it is suggested to choose the liquid funds as per your requirements. Also, keep your financial goals and risk-bearing capacity in mind while making an investment. Following I am going to share Top 10 liquid funds in India to invest along with the returns in the last three years.
▶️ Axis Liquid Funds
1 Year Return- 5.4%
3 Years Return- 6.7%
Category- Debt
Axis Liquid Funds are continually hitting the benchmark of the Debt segment. The fund is providing a good amount of average return which was 5.4% in one year. The investment amount is starting from a very affordable and low amount i.e. 500 INR. A minimum SIP investment amount that is required is 500 INR for this scheme. But the positive thing is that Axis Liquid Funds are one of the remarkable debt mutual funds in India.
▶️ Aditya Birla Sun Life Fund
1-Year Return- 5.5%
3 Year Return- 6.7%
Category- Debt
The fund performance has been remarkable and one of the best liquid funds to invest in India. The Aditya Birla Sun Life Fund has been providing 5.5% returns in one year. The minimum amount to invest in these funds is INR 500 and minimum INR 1000 is required for SIP investment. Investing in these funds is a quite secure deal. These funds let you withdraw money anytime and even allows you to keep zero balance in your account.
▶️ ICICI Prudential Liquid Funds
1 Year Return- 5.4%
3 Year Return- 6.6%
Category- Debt
ICICI Prudential Liquid Funds is a very affordable fund to start with and maturity period of up to 3 months. You can park your spare amount in this kind of investment and can expect better returns. It also allows you to withdraw money whenever wanted. There are very fewer chances of incurring losses in liquid fund investment. A minimum of 99 INR is required to invest in a lump sum or SIP Investment.
▶️ Baroda Pioneer Liquid Fund
1 Year Return- 5.3%
3 Year Return- 6.6%
Category- Debt
The fund performance has been providing a return of 6.6% in three years and 5.3% returns last year. A minimum of 5000 INR is required for lump sum investment and 500 INR for SIP investment. These funds provide a high level of liquidity the investor can invest and withdraw amount anytime. The transaction will take a maximum of 24 hours to reflect in your account.
▶️ HSBC Cash Fund
1 Year Return- 5.2%
3 Year Return- 6.6%
Category- Debt
HSBC Cash funds have a maturity period of up to three months i.e. 91 Days. One can expect higher returns than a savings account in the bank. The risk factor while investing ion the HSBC cash fund is quite low than other investment schemes. The returns provided by these funds in last year are 5.2% and three years 6.6%. The minimum lump sum amount that is required to invest this scheme is 5000 INR and the minimum SIP investment is 500 INR.
▶️IDBI Liquid Funds
1 Year Return- 5.5%
3 Year Return- 6.7%
Category- Debt
IDBI is an investment in debt scheme having a maturity period of 91 days. It is the best investment scheme for those who are willing to invest for a shorter time period. The fund’s performance is going good providing returns of 6.7% annually in the last three years and 5.5% of return in last year. 5000 INR is required to invest a lump sum in IDBI liquid funds and 500 INR is required minimum to invest in the SIP investment plan of IDBI funds.
▶️ Mahindra Liquid Funds
1 Year Return- 5.4%
3 Year Return- 6.7%
Category- Debt
Mahindra Liquid funds are debt segment mutual funds that provided 6.7% of returns annually in the last three years and approximately 5.4% return in last year.
What is the minimum lump sum investment and SIP required investing in Mahindra funds?
Well, Mahindra Liquid Fund’s minimum lump sum investment is 1000, and SIP investment is 500 INR which is very economical for an investor. It provides high liquidity and good returns along with a low amount of risk to its investors.
▶️ Nippon India Liquid Funds
1 Year Return- 5.4%
3 Year Return- 6.7%
Category- Debt
Nippon India Liquid funds have a maturity period of up to three months i.e. 91 Days. One can expect higher returns than a savings account in the bank. The risk factor while investing in Nippon India is quite low than other investment schemes. The returns provided by these funds in last year are 5.4% and three years 6.7%. The minimum lump sum amount that is required to invest this scheme is 100 INR and minimum SIP investment is 100 INR.
▶️ LIC Liquid Funds
1 Year Return- 5.4%
3 Year Return- 6.6%
Category- Debt
LIC funds are open-ended debt mutual funds schemes that provide high liquidity and a low risk to the investor. It is also one of the best funds to invest in as it generated a quite reasonable return on your investment.
These funds have given 6.5% of annual return in the last three years and last year the return was 5.47%. A person can invest in the LIC liquid fund lump sum investment scheme with an amount of just Rs.5000 and for starting investment in SIP investment plan the minimum amount that is required is 1000 INR.
▶️ Tata Liquid Funds
1 Year Return- 5.4%
3 Year Return- 6.6%
Category- Debt
Tata Liquid Fund is a debt fund scheme that is launched by Tata Mutual Fund. This scheme has given an average return of 6.6% in the last three years and 5.4% of returns last year. The minimum amount required to invest in lump sum investment is 5000 INR and 500 INR for investment in the SIP investment plan.
Investing in Tata Liquid funds is the best way to utilize your ideal cash with quite high returns as compared to a savings account in a bank. These funds are best suitable when you want your money back in a very short period of time.