Liquid Funds Vs Savings Account: Where To Park Your Idle Cash?

Certainly, almost all of us have a savings account to store our cash and fulfil all our expenditures. Among them, very few know that there are other ways to park idle cash and earn better returns than a savings account. Liquid Funds are one of those options. Liquid funds are debt mutual fund that invest in liquid assets for a shorter duration of time. While Savings account is a Bank account that works as a liquid fund but offers fixed returns on your savings. Liquid funds not only keep your money available like a savings account but also offer better returns than them. We have mentioned a few features to determine which is better- liquid funds vs savings account. Have a look!

Why Should you Invest in Liquid Funds Rather Than Savings Account?

1. Liquid Funds invest in short-term investment instruments like commercial papers, certificates of deposit, treasury bills etc.
2. With Liquid Mutual Funds one gets the flexibility to invest or withdraw whenever one wants to without any penalty or exit load.
3. When investing in Mutual Funds, some fund houses also offer ATM card to withdraw money. This further adds on to your convenience.
4. Some of the Best Liquid Funds offer much better interest rate than that of savings account.

Liquid Funds Vs Savings Account: Where To Invest?

Based on certain parameters, we can figure out the difference between liquid funds and savings account.

Let’s figure out those parameters.

Below are the Top 5 Liquid Funds Performance

• Accessibility Of Both

Investing in Liquid Funds is easy and convenient. One can invest in these funds through online banking instruments like mobile apps or online websites. But, to deposit money in a savings account it is mandatory to visit the bank.

• Tax On Liquid Funds & Savings Account

The taxation applicable on Liquid Funds is short-term Capital Gains tax, that is calculated based on the tax slab of the investor. While on a savings account, the returns are taxed as per the investor’s tax slab.

• Suitability Of Liquid Funds & Savings Account

Liquid funds are suitable for the ones who want to earn better returns than a savings account and want their cash available as well. While savings account is suitable for people who just want to park them money for storage purpose.

So, you must be having a detailed understanding of savings account, best savings rates, and liquid funds, and how the returns of both these investing instruments vary. Though, the decision to choose between liquid funds and a savings account totally depends on the investor, however, it is advised to invest in higher returns yielding Liquid Funds. invest smart, earn better!