Money word, in plain English ← Back to all terms
Liquid fund
A mutual fund holding very short-term debt, used to park money you may need soon.
Example. Park ₹50,000 in a liquid fund and you can usually have it back the next working day.
A liquid fund invests in debt instruments maturing within 91 days. Because the holdings mature so quickly, the value barely moves when interest rates change, which is why people use these funds for an emergency cushion or for money waiting to be invested. Low risk is not the same as no risk. A credit problem in the portfolio can still hurt. Redemption money normally reaches your bank the next working day, and some liquid schemes offer same-day credit up to a capped amount.
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