Question: Which Is Better Liquid Fund Or Debt Fund?

Which is the best liquid fund to invest?

Top 10 Liquid Mutual FundsFund NameCategoryRatingPGIM India Insta Cash FundDebt4starAditya Birla Sun Life Liquid FundDebt4starTata Liquid FundDebt4starMahindra Liquid FundDebt4star12 more rows.

Is it wise to invest in liquid funds?

Investing emergency corpus in liquid funds has been a regular practice. It is preferred for its easy liquidity and ability to generate better returns than savings bank accounts. … Investors who have no urgent need for money should, therefore, stay invested.

Is liquid fund tax free?

Liquid funds held for more than three years are eligible for long term capital gains tax with indexation. If you sell before three years, you have to pay tax as per your tax slab.

Is it right time to invest in liquid funds?

Ideally, liquid funds are suitable for achieving short-term financial goals. Since some funds generate around 8% to 9% returns, they should be preferred over a regular savings bank account which offers returns in the range of 4% to 6%.

Are debt funds risk free?

Things to keep in mind when investing in a debt fund now You should keep a tab on risks like credit risk, liquidity risk, interest rate risk, and duration risk when investing in a debt fund. … One thing is now clear to most investors — debt funds are not risk-free.

How do you put money in a liquid fund?

To be able to invest in a liquid fund, the investor should have KYC formalities completed with a KYC registration agency. A KYC form needs to be filled up and documents (address and identity proof) should be submitted, with originals for this purpose.

Which is better debt fund or fixed deposit?

The big difference is that debt funds offer a lot of flexibility and choice. Bank FDs are now giving just about 7-7.5% interest on their FDs. … On the other hand debt funds will also benefit from falling interest rates as debt funds experience NAV appreciation when rates fall.

Which are the safest debt funds?

SynopsisScheme nameInception dateCategoryICICI Pru Corporate Bond Gr11-08-2009Corporate BondKotak Bond S/T Reg Gr02-05-2002Short DurationL&T Money Market Gr10-08-2005Money Market FundSBI Savings Reg Gr19-07-2004Money Market Fund30 more rows•Jul 17, 2020

Is mutual fund is safe to invest?

In a nutshell, mutual funds are safe. Investors should not be worried about short-term fluctuations in the returns while investing in them.

What is the lock in period for liquid funds?

Definition: Liquid funds are a type of mutual funds that invest in securities with a residual maturity of up to 91 days. Assets invested are not tied up for a long time as liquid funds do not have a lock-in period.

How safe are liquid funds?

Liquid funds are high liquidity open-ended income schemes that invest in debt and money market instruments such as government securities, treasury bills and call money among others. These instruments have a maximum maturity period of 91 days and are considered safe because they mitigate interest rate volatility risk.

Why did liquid funds give negative returns?

“The spike in bond yields has led to investors making negative returns in safe categories like liquid funds over the last one week,” says the chief investment officer at a domestic fund house. The fall in value has not gone well with treasury heads at corporate houses, which have started withdrawing more money.

Is there any risk in debt funds?

Investing in debt funds carries various types of risk. These risks include Credit risk, Interest rate risk, Inflation risk, reinvestment risk etc. But the key risks which needs be considered before investing in Debt funds are Credit Risk and Interest Rate Risk; Credit Risk (Default Risk):

Is Liquid Fund safe in Phonepe?

Liquid Funds are the safest mutual fund schemes as they DON’T invest in the stock market. Your money is invested in safer instruments such as Government and Bank securities. What are the returns from liquid funds? Liquid Funds tend to deliver significantly higher returns compared to Savings Account (see chart below).

What is difference between debt fund and liquid fund?

Debt funds refer to the category of mutual funds that invest in a pool of debt oriented or fixed income securities. … Liquid funds on the other hand are essentially a subset of debt funds. These funds invest in securities that have a maturity profile of a maximum of 91 days.

Can liquid funds give negative returns?

On an average, liquid funds have delivered 0% over the past week, according to data from Value Research and many large liquid funds have actually delivered negative returns. Ultra Short Duration Funds have given -0.48%, money market funds have given -0.51% and low duration funds have delivered -0.91%.

Can I lose money in liquid funds?

Since a liquid fund invests only in short term securities, it’s market value does not respond much when interest rates change in the market. This means that liquid funds do not have significant capital gains or losses.

Is liquid funds safe now?

Liquid funds or any other fund which is meant for short term goals ideally should avoid taking excessive credit or liquidity risk. The latest debacle shows that some debt funds have not fulfilled this basic requirement and took undue credit risk. Liquid funds carry no credit risk, no liquidity risk.