5 Best Liquid Funds To Keep Your Money Safe And Liquid In 2024

5 Best Liquid Funds To Keep Your Money Safe And Liquid In 2024

When it comes to investing your hard-earned money, safety and liquidity are top priorities. In a dynamic financial landscape, possessing assets readily converted to cash without incurring significant losses is essential. This is where liquid funds come into the picture.

In this article, we will explore the best liquid funds in 2024 and help you discover which are the best liquid funds to invest in India for 2024. Whether you are a seasoned investor or just starting, these funds offer a secure and flexible way to grow your wealth while maintaining quick access to your funds.

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Understanding Liquid Funds

Liquid funds are a category of mutual funds designed for investors seeking a safe and convenient place to park their surplus cash.

They are known for their high liquidity, making them an ideal choice for parking money for the short term. These funds predominantly invest in short-term debt instruments, such as government securities, treasury bills, certificates of deposit, and highly rated corporate bonds.

Features That Set Liquid Funds Apart

The following are the features that set liquid funds apart from the rest of the investments:

High Liquidity

Liquid funds aim for high liquidity, allowing investors to redeem their investments quickly, often within 24 hours. This feature makes them an excellent choice for parking funds needed at short notice.

Safety and Stability

Liquid funds primarily invest in low-risk debt instruments, which translates to lower volatility than equity funds. While they are not entirely risk-free, they are considered one of the safest investment options in the mutual fund universe.

Potential for Competitive Returns

Liquid funds strive to generate competitive returns by investing in a diversified portfolio of short-term instruments. While these returns may not match those of equity funds, they often outperform traditional savings accounts or fixed deposits.

Why Liquid Funds For 2024

Several factors contribute to their suitability in the current financial landscape:

Interest Rate

The prevailing interest rate environment can significantly impact the returns on fixed-income investments. In a period of rising interest rates, liquid funds can actively manage their portfolio to optimize returns, making them a flexible choice for investors.

Market Volatility

Given the uncertainty and volatility that characterize financial markets, having a portion of your portfolio in a stable, low-risk option like liquid funds can act as a financial cushion during market downturns.

Emergency Funds

Liquid funds provide the liquidity needed to respond to emergencies promptly without compromising on returns.

Tax Efficiency

Investing in liquid funds through SIP can help investors average out their cost of investment and reduce their tax liability. Liquid funds are a good investment option for investors who need to park their surplus funds in a low-risk and liquid investment.

Which are the Best Liquid Funds to Invest in India?

It is essential to recognize that the Indian market offers a variety of options, each with its unique attributes. To help you make informed decisions, here are some top picks for the best liquid funds in 2024 by Moneycontrol:

Franklin India Liquid Fund- Super Institutional Plan-Growth

Franklin India Liquid Fund – Growth caters to the needs of investors seeking short-term, low-risk opportunities. With a significant allocation of 143.95% to debt instruments, this fund offers a compelling alternative to traditional bank accounts and fixed deposits.

Within its debt portfolio, approximately 13.7% of the assets are invested in government securities, known for their stability and reliability. The majority of the allocation, approximately 130.2%, is directed towards low-risk securities, which contribute to the fund’s overall security and income potential.

source: https://www.moneycontrol.com/mutual-funds/nav/franklin-india-liquid-fund-super-institutional-plan/MTE083

Quantum Liquid Fund – Growth

The Quantum Liquid Fund-Growth is an excellent choice for investors seeking a short-term investment option as an alternative to traditional bank accounts and deposits. This fund boasts a well-structured portfolio, with 94.49% of its investments allocated to debt instruments, demonstrating its commitment to low-risk, income-generating assets.

It substantially allocates to government securities, comprising 53.23% of its portfolio. Government securities are known for their high creditworthiness, making them one of the safest investments available. By incorporating these into its portfolio, Quantum Liquid Growth ensures that investors’ capital remains well-protected.

Furthermore, the fund dedicates 41.26% of its holdings to low-risk securities, indicating a balanced approach to generating returns while maintaining security.

source: https://www.moneycontrol.com/mutual-funds/nav/quantum-liquid-fund-growth/MQU020

Motilal Oswal Liquid Fund

The Motilal Oswal Liquid Fund is an excellent choice for investors seeking a highly liquid and secure investment option for their short-term financial needs. This fund allocates a significant 85.88% of its portfolio to debt instruments, making it an ideal alternative to traditional bank accounts or fixed deposits.

This fund strategically places 32.21% of its assets within its debt allocation in government securities, known for their stability and reliability. Additionally, a substantial 53.66% is invested in low-risk securities, offering investors a balanced combination of safety and potential returns.

source: https://www.moneycontrol.com/mutual-funds/nav/motilal-oswal-liquid-fund-growth/MMO049

Canara Robeco Liquid Fund – Regular Plan-Growth

It is an attractive choice for investors seeking a safe and liquid investment option for the short term. This fund primarily focuses on preserving capital while offering a competitive return on your investment.

The fund ensures a stable and predictable investment environment with an impressive 98.05% allocation to debt instruments. Among its debt holdings, approximately 19.99% is invested in government securities, known for their highest level of creditworthiness. These government-backed securities provide an added layer of security, making this fund an appealing alternative to traditional bank accounts and deposits.

Moreover, the Canara Robeco Liquid Fund allocates 78.06% of its assets to low-risk securities, further enhancing the safety and stability of the portfolio. This blend of government securities and low-risk instruments allows the fund to strike a balance between security and potential returns.

source: https://www.moneycontrol.com/mutual-funds/nav/canara-robeco-liquid-fund-regular-plan-growth/MCA088

Final Takeaways

The best liquid funds in 2024 for India encompass a range of options, each designed to cater to specific investor needs. These funds are known for their stability, liquidity, and competitive returns.

However, aligning your investment choice with your financial goals, risk tolerance, and investment horizon is crucial. By carefully assessing your requirements and selecting the fund that best suits your needs, you can optimize your short-term investments for a successful financial journey in 2024.

Koshex is here to help you navigate the world of mutual funds and grow your wealth. With hyper-personalized investment recommendations, Koshex empowers you to achieve your financial goals with ease! Sign up with Koshex today to kickstart your investment journey with confidence!

Frequently Asked Questions (FAQs)

Q1. Are liquid mutual funds suitable for long-term investments?

Ans. Liquid mutual funds are not suitable for long-term investments. These funds are designed for short-term investment periods, ranging from a few days to a few months. They primarily focus on providing liquidity and preserving capital.

Q2. What is the minimum investment amount for liquid funds in India?

Ans. The minimum investment amount for liquid funds in India can vary depending on the fund house and the specific scheme. However, in most cases, the minimum investment amount is relatively low, ranging from Rs. 100 to Rs. 500.