In what way are liquid funds superior to bank fixed deposits? When can one invest in liquid Funds?
V. Rajesh, Bangalore
Liquid funds score on two counts in comparison to bank fixed deposits—tax efficiency and higher liquidity than bank deposits. You can get you money back from a liquid fund at a days notice without any compromise on return. Banks penalise depositors for pre mature withdrawals. The post-tax return in a liquid fund is better when compared to a bank fixed deposit and the tax arbitrage is what which makes these funds better than keeping your money in bank deposits.
