Liquid and ultra short-term funds

Liquid and ultra short-term funds

Ultra Short Tem Funds

Ultra Short Tem Funds

These funds are for investing your surplus amount lying in your current/saving bank accounts for better returns. While liquid funds are meant to park your cash upto one week to three months. Ultra short-term funds are good options if you wish to invest for three to six months. In the mutual fund space, liquid funds are considered as low risky. Liquid Funds invests in bonds/securities that matures in three to six months. There is no volatility in liquid funds. Liquid Funds are good options against saving and current account which hardly generates any returns . The liquidity is very high in these funds. You receive the credit of money in your account before 24 hrs from the valid redemption time on working days. You are allowed to partly add/redeem in these funds. It is good option to park week-end money even for three/four days. You receive roughly six months to one year bank fixed deposit returns in the liquid funds. This is very popular investment option because you receive the appreciation in investment amount even if invested for one day.
You have both growth and dividend options in liquid funds.
In dividend option you have dividend payout and dividend reinvestment option. The dividends are paid on daily, weekly or monthly basis as per the request. Dividends are Tax free but mutual funds have to pay the dividend distribution tax before paying the dividends to the investors.

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Posted in Debt Funds.

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