Liquid fund vs auto sweep account

POSTED BY sagar ON July 18, 2012 3:33 pm ONE COMMENT

Every month I am left with 20-25K of extra money apart from monthly expenses and other investments. Recently I came to know about liquid funds which offer benefits of liquidity as well as higher interest rates. The current interest rates which are being offered are around 7.5-9 % excluding taxes. However since banks are nowadays offering term deposit (auto sweep) facility where u can park your all extra money and can earn interest rates ranging from 7-9% (depending on the period).
Under such scenario, do liquid funds offer any special benefits or is it better to keep your money in savings plus account and earn fixed and assured income with 100% liquidity with no headache of tax management ??

Thanks and Regards.

One reply on this article “Liquid fund vs auto sweep account”

  1. Dear Sagar, the answer lies in the taxation part itself. A better option ‘ll be to create a good emergency fund as per your requirement. Now split it into 2 parts (any ratio 50-50, 40-60, 30-70) & keep 1 part in that sweeping FD & remaining in Liquid funds.

    Thanks

    Ashal

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