How Liquid Funds Work
Liquid funds are debt mutual funds that invest money in short -term market instrument such as government securities, treasury bills and call money. Like the way you make deposits at the bank, liquid funds invest your money in short-term debt instruments that mature in less than 90 days. Liquid funds are most stable and less volatile types of investments. But they are not entirely risk free. So, if you have a short time period to make an investment, it is better to park your money in liquid funds. It provides higher returns than a savings bank account. Apart from that, these funds don’t have exit loads.
How To Invest in Liquid Funds with Gulaq
Investing in Gulaq is as easy as ABC. A modern platform wherein you can start with as low as 100 INR without any hassle. All you need to do is sign-up; choose your liquid fund; invest in the amount you are thinking of, and bravo its good to go. Also, you can take a view of your portfolio just to keep the track.
How To Evaluate Liquid funds?
Liquid funds are mainly debt funds which invest in certificates of deposits, treasury bills and commercial papers. To evaluate a liquid funds, there are certain factor to take into the consideration.
It’s one of the critical things to look after before deciding the fund. You may look for the funds which have delivered consistent returns over a long-time horizon. Select those funds which have outperformed their benchmark over a consistent period.
It’s quite important criterion to decide any liquid fund. Before selecting any Fund house, make sure to check the history of the fund and it’s performances. A fund house which has provided consistent returns over a period is good for investment.
The expense ratio is quite an important factor to select any best liquid funds. It indicates the amount of your investment is being deducted to manage the expenses of the fund. A lower expense ratio is always good for the investor. So, make sure to choose a fund which has a lower expense ratio and superior performance.
Financial ratio is one of the important parameters to analyse the performance of the fund from different ways. You can use standard deviation, Sharpe ratio, alpha and beta to examine the risk -adjusted returns. Any liquid fund with having higher standard deviation and beta is quite riskier than a fund with lower beta and standard deviation. Apart from that look for the liquid funds,
which have a higher Sharpe ratio which means it gives higher returns on every additional unit of risk taken.
Why Salary Day is Crucial for Liquid Fund Investment?
Salary Day is the day of celebration, but EMIs, Rent, and other payments step forward and psst! The account gets debited. That’s okay, once all payments have been made, time to think about the remaining money. How about investing in liquid funds rather than making them stay in your savings account? The answer is reasonable, the return of liquid funds is better as compared to your FDs/RDs or savings account. And for the unannounced crisis, withdrawal from liquid funds are easier as compared to FDs that comes with the lock-in-period. Precisely, the choice over here is crystal clear.
Frequently Asked Questions
