Finding it difficult to save money? Liquid Funds can help! (2024)

FAQs

Finding it difficult to save money? Liquid Funds can help!? ›

Whatever may be your reason for not being able to save, Liquid Funds can help overcome that challenge due to its simple, safe and flexible nature. Here's why. Investing in liquid funds will help you set aside money outside your savings account which means you are less likely to spend that money on impulsive purchases.

Here are some benefits that liquid assets can bring to your savings portfolio or day-to-day financial life: Fast access to cash when you need it. When you have liquid assets in your portfolio, you can easily access the cash you might need for emergencies or other large purchases.

Liquid funds provide tax benefits to investors, with debt taxation applicable after a holding period of three years. Upon redemption, investors can enjoy indexation benefits, treating profits as long-term capital gains.

Saving money is hard. One of the most common reasons is that you might not have a good enough reason to save. Maybe you're overly focused on the present, or maybe you simply don't know what you want in the future. Either way, you need to get a vision for what you want to achieve with your money.

Liquid funds are ideal for low-risk investors looking to park surplus cash for the short term. The biggest advantage of liquid funds is that it offers superior returns than bank deposits. But the returns on liquid funds is not guaranteed. This is the biggest disadvantage of liquid funds.

Liquid funds are debt mutual funds where you can invest your money for a short term and withdraw it at any time you like. It means your money does not stay tied for a long time. On the other hand, Savings account is one where you park your savings and banks give you interests on the same.

Liquidity is important because owning liquid assets allows you to pay for basic living expenses and handle emergencies when they arise. But it's important to recognize that liquidity and holding liquid assets comes at a cost. In general, the more liquid an asset is, the less its value will increase over time.

The main objective of a liquid fund is to provide capital protection and liquidity to the investors. Therefore, the fund manager selects high-quality debt securities and invests according to the scheme's mandate. Further, it ensures that the average maturity of the portfolio is not more than 91 days.

The primary benefit of investing in liquid funds is their high liquidity, which means how fast an asset can be bought or sold and converted into cash. Liquid funds provide investors with easy access to their money when needed, making them a convenient option for short-term investments with stable returns.

The disadvantages of liquid funds are as follows: Exposure to certain risks: Liquid funds may carry some risks like inflation risk, interest rate risk and credit risk. You can minimise some of these risks by choosing your mutual fund house and scheme after careful analysis.

Why do people struggle to save money? ›

Difficulty saving money is often caused by common struggles — high expenses, lack of a structured budget, no emergency fund, lack of clearly defined goals, high credit card debt, or large student loans.

It may be that you have too much credit card debt, not enough income, or you overspend on unnecessary purchases when you feel stressed or anxious. Or perhaps, it's a combination of problems. Make a separate plan for each one.

The body can digest clear liquids easily. Clear liquids leave nothing behind in the digestive tract, making it easier for doctors to perform a range of procedures. Clear liquids provide calories, electrolytes, and water, which means they can help nourish the body and prevent dehydration.

Such investment can be made in a lump sum or through a Systematic Investment Plan (SIP). If one has registered a SIP, the investment amount is deducted automatically from the bank account on a specified date and invested in the specified mutual fund scheme.

Low Risk: A liquid fund is a low-risk debt fund that focuses on providing the safety of principal and steady returns. As a result, the value of a liquid fund is fairly stable across different interest rate cycles in the market.

Liquidity refers to how rapidly an asset can be converted into cash, with cash being the most liquid asset. fThe more “liquid” an asset is, the easier it is to convert into cash in hand when necessary. Liquid assets can help small business owners calculate their net worth and do financial planning.

A liquid asset is an asset that can easily be converted into cash in a short amount of time. Liquid assets include things like cash, money market instruments, and marketable securities. Both individuals and businesses can be concerned with tracking liquid assets as a portion of their net worth.

the precautionary motive: people prefer to have liquidity in the case of social unexpected problems that need unusual costs. The amount of money demanded for this purpose increases as income increases. speculative motive: people retain liquidity to speculate that bond prices will fall.

A liquid asset is defined as a type of asset that can quickly and easily be converted into cash while retaining its market value. Liquid assets are a particularly important safeguard to have if you experience financial hardship and need cash fast. Your liquid assets also help contribute to your overall net worth.