For most of the Investors - Saving Bank account and for Corporate - Current Account becomes the preferred destination to park their surplus funds. Even when they need to build a contingency fund, they cannot think of better havens.
The reason for such a decision might be lack of awareness or a time crunch. However, leaving your short-term funds in a Saving bank account & Current account is the least efficient way from an investment standpoint.
Now you may ask “Is there a better way to deal with surplus cash?”
Of course yes! Invest your short-term funds in “Liquid Funds”.
You can choose to invest for a few days or months depending on your financial needs. The fund returns are according to the prevailing market rates. The best part is that there is no exit load applicable for liquid funds. These are available in variants like Daily/Weekly/Monthly Dividend and Growth option.
You can earn steady returns over a short time interval. Moreover, you can redeem a part or the entire amount of investment within 24 hours.
For Ex: if a Company or an Individual want to park Rs.5,00,00,000/- for a week end then you should do the transaction on Friday ( both purchase before 2 pm & Redemption after 2 pm respectively. ) if you invest in liquid fund before 2 pm you will get yesterday NAV for purchase day and since you are doing redemption also on the day after 2 pm next working days previous day NAV will be applicable which is Sunday .
So you actually Invested from Thursday to Sunday and the money will credit back to your bank account by Monday morning.
The average return on such funds are currently at 5% – 7% p.a
Because Wealth is Good
Being wealthy is awesome...