Exploring the Liquid Funds

Hello Friends,

Let us learn more about Liquid Funds:-

Liquid Fund is of a Debt Mutual Fund Category where your money will be invested into the Fixed Income options like Government Securities, Treasury Bills, Commercial papers, and some secure Bonds.

The purpose of investment in Liquid Fund should be of short duration. The best part of these funds is that you get you money within 24 hours from the time of request of redemption. Some Liquid Funds transfer your money by IMPS and you get money within half an hour. Some AMCs offer a card like Debit Card for the purpose of redemption and customer can withdraw his or her money from the nearest ATMs of specified Banks. They may have a limit of withdrawal per day, hence I recommend the blog readers to verify it before you start investing in Liquid Funds.

If one has idle cash in saving bank account and this amount may be required anytime in upcoming days, then rather than keeping your money in Saving Bank Account, Liquid Fund is the better option for this investment. If a person is working professional then it has been advised to keep 6 months income in liquid format to tackle the situations like losing a job, Lockdown during epidemic, shut down of the company or by any other reasons by which persona may not get salary or a salary may be delayed. If a person is a businessman then he should keep business expenses of 2 years in a liquid format. For these two requirements liquid fund suits well and help to get the money whenever investor wants. The prompt action in redemption of  money makes this funds to be known as Insta Funds also.

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I For Investment Financial Consultancy has brought you an opportunity to learn more about Mutual Funds. We will keep this blog updated periodically. Enjoy learning for the betterment of your Investment World.

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Definition of mutual funds:-

•Mutual Funds is a name given to a pool of contribution made by various investors. This investment has to be managed by professional and experienced Fund Managers.

Types of Mutual Funds

Types of Mutual Funds:-

Equity Mutual funds:-

•Equity Mutual Funds invest your money in Stock Market and the investment risk has to be borne by the investor. Rate of Returns depends upon the movement in Stock Market. If one has to invest in Equity Mutual Funds then he has to apply a formula 100-Age=% of Equity Investment.

•For example, a person is 25 years old then 100-25=75%, it indicates that his investment should not be more than 75% in Equity Mutual Funds or Stock market.

•Recommended for:- Young bread winners for the family

Debt Mutual funds:-

•Debt Mutual Funds invest your money in Fixed Income Investment such as Corporate Bonds, Government Bonds, Corporate Securities. These types of investment are more secure compare to the investment in Equity Funds. However there returns given by these funds may be less than the equity funds.

Balanced or hybrid Mutual funds:- 

•Balanced or Hybrid Mutual Funds have been designed for the investors who want a safety as well as some returns on their investment. In these types of mutual funds the investment will be done in Equity, Debt, Bonds and some fixed income instruments.

Money market Mutual funds:-

•Here your money will be invested for a short duration even for 7 days. The investment has high liquidity with no risk. These investments are alternative to the money kept in saving bank account.These funds are called Liquid Funds too.

Exchange Traded Funds (ETF):-

•Exchange Traded Funds need a D-Mat Account to begin with the investment, however there are Funds of Funds which do not need D-Mat Account for the investment.

•For Example:- A Gold Fund

•One should have 10 to 15% of Portfolio invested into Gold Funds SIPs.

Types of mutual funds as per the investment duration:-

•Open Ended Mutual Funds:- These Funds allow the investor to exit as per his or her requirements of Money. Some Funds charge Exit Load if investor exits before a year.

•Close Ended Mutual Funds:- Close Ended Mutual funds have a lock-in period which doesn’t allow the investor to exit as per his requirements. Close Ended Funds are popularly known as Equity Linked Saving Scheme (ELSS) which allows investors to get Tax Benefits U/S 80 C of Income Tax.

•One should choose the funds carefully as per the future requirements. 

Various Equity Funds:-

ØLarge Cap or Blue chip Funds:- These Funds invest your money in the stocks which have the capital value more than 20,000 Crores.

ØMid Cap Funds:- These Funds invest your money in the stocks which have the capital value between 5,000 and 20,000 Crores.

ØSmall Cap Funds:- These Funds invest your money in the stocks which have the capital value less than 5,000 Crores.

ØMulti-Cap funds:- These Funds invest your money in Large Cap, Mid Cap and Small Cap Companies.

Options to invest in Mutual funds:-

•Onetime Investment:- Minimum investment has to be of Rs. 5,000

•SIP:- Systematic Investment Plan- Minimum investment has to be of Rs. 1,000 per month, Some funds allow the investment of Rs, 500 per month is called Micro SIPs. SIPs can be done daily, monthly and Quarterly too.

•STP:- Systematic Transfer Plan:- Here investor has to choose two funds where money will be transferred from one to another as per the instructions given by the investor

•Investment in Liquid Funds:- Rather than keeping money idle in Saving Bank Account, this option of investment is more popular among the investors, These funds give you the money as per your requirements. Some Funds provide Debit cards and some funds use IMPS to give you money whenever you need. 

Technical Terminologies of Mutual funds:-

qNFO:- New Fund Offer

qSTP:- Systematic Transfer Plan

qSWP:-Systematic Withdrawal Plan

qSIP:- Systematic Investment Plan

qExit Load:- Charges against Premature Exit

qEntry Load:- Charges at the time of Beginning

qAMC:- Asset Management Companies

qNAV:- Net Asset Value

qFund Value:- Value of your investment including the profit or loss

qAUM:- Asset Under Management

qKYC:- Known Your Client

Choices for investor:-

•Direct Mutual Funds:- Here investor invests directly with the fund without any intermediary

•Regular Mutual Funds:- Here Investor invests with a guidance of any advisor or a broker

•Growth / Dividend or Bonus:- Investor has to decide at the time of beginning

•DMAT Mode or Physical Mode:- Investor can invest with or without DMAT account, however to invest in Exchange Traded Funds (ETF) one needs to have a D-Mat Account.

Most popular applications for mutual funds:-

FundzBazar:-

•FundzBazar Website:- Click here to go to FundZBazar 

FundzBazar Mobile App:-Click here to download FundBazar Mobile App.

Help From IFI•Click here to get our help for Mutual Funds

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Email:- iforinvestment@rediffmail.com