Liquid Funds – Returns

POSTED BY sha faisal ON March 19, 2012 11:16 pm COMMENTS (12)

Hi, 

Can some one make me understand what Liquid funds are? And what returns do we get if we invest for a period of 45-90 days. I heard that HDFC and Reliance Liquid funds give interest of abt 6-8% for a period of 45-90 days.Is it correct?

 

Thanks,

Faisal.

12 replies on this article “Liquid Funds – Returns”

  1. Sachin Kumar Nigam says:

    hi there

    jst on a curious note are u the same shah faisal who topped the upsc civil services in 2009?

    regds
    sachin

    1. sha faisal says:

      @Sachin:

      ohh no! You absolutely mistook me. I have no resemblance to him. I am just a common man.

  2. Dear Sha Faisal, are you investing in liquid funds for keeping liquidity or for return purpose? Please elaborate?

    Thanks

    Ashal

    1. sha faisal says:

      @ Ashal:

      Well, I want to park that money for next 90 days and if returns are somewhere around 6-8% then I would like to continue. That’s the surplus amount I have which I don’t need for next 3-6 months.

      Thanks,
      Faisal.

      1. Dear Sha Faisal, for the given period of 90 days, you ‘ll earn around 1.5 to 2% actual return which is 6-8% annualized return. In simple words – for your investment of 1L Rs. after the 90 day period your money may become 101500 to 102000 Rs. Please do note there is no guarantee of such returns as MFs are subject to market risk.

        Thanks

        Ashal

  3. Fisal,

    I dont think liquid funds will be able to give you 6 – 8 % for parking your money for 90 days. The interest is way too high to expect. 6% for 8 or 9 months months or so should be reasonable.

    Liquid fund from reliance seem to be doing good

  4. TheZionView says:

    @sha faisal

    to get a return of 4% in 90 days(3 months) the fund should give annualized return of 16% which i don’t think any liquid fund can give. that kind of return

    Don’t mistake the 4% or 6% returns quoted in FDs they are Per Annum quotes.

  5. sha faisal says:

    @ justgrowmymoney:

    are there any chances to get somewhere like 4-5 % on a period of 60-90 days? Comparing with bank interest rates what is the major difference apart from tax exemption?

  6. ~8% is the annual return. If these funds are held for 2 months (60days) the approximate return would be 8*(2/12)=1.33% absolute return. There are so many factors like interest rate etc that will impact the return.

  7. BanyanFA says:

    And yes, I forgot to answer your question – the current return from Reliance Liquid Fund is around 9.25%. It is irrespective of the duration. If you buy today and sell it after a week, you may probably get the same rate of return.

    Regards
    BFA

  8. BanyanFA says:

    Hi Faisal,
    Liquid funds are meant to park your funds on a short term basis rather than investment basis. Their returns depends upon the prevailing interest rates in the economy and they are very safe form of investments. There has already been a discussion on this. You can get more details on the following link :

    http://localhost/jagoforum2/short-term-savings/2795/

    Regards
    BFA

    1. sha faisal says:

      @ BFA:

      Thanks for ur inputs. But I do have a question.

      Is it for sure that we get 8-9% returns in Reliance Liquid Fund for a limited period of 45-60 days? If its true then I guess people should not look at banks for depositing their amount for a mere interest of 1.5-2.5% for a period of 45-60 days.

      Many Thanks,
      Faisal.

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