Which is more liquid – Liquid fund or FD ?

POSTED BY webgenius ON January 3, 2011 7:54 am COMMENTS (3)

Hello all,

I initially thought that liquid funds are more liquid than FDs. But the post in the below link says otherwise:

http://www.subramoney.com/2010/12/emergency-fund-requirement-where-to-keep/

Please let me know which is more liquid. I am planning to keep 200,000 aside for emergency purposes.

How much time does it take to get back the amount invested in FD and liquid fund?

3 replies on this article “Which is more liquid – Liquid fund or FD ?”

  1. Vishnu Prasath says:

    Yes, theoretically, FDs are more liquid. Anyway, 1-2 days doesn’t matter in most cases.

    I would suggest opening multiple FDs with the investment period which gives you best rates. In case of Emergency, you will be able to break the FD with or without penalty (Many Corporate salary accounts have benefit of ‘No Penalty’).

    Emergencies doesn’t occur often. So, it is more likely that you will not need to break the FD. So, you will get the best rates.

    Even when that happens, you can break the FD and you will get your money in 1 working day.

  2. Ramesh says:

    Probably because FD give money on the same date. You request in the morning and you get the money by afternoon/evening same day!

  3. With liquid funds, if you request redemption today, you’ll get your money the next business day in your bank account. Also, there are many funds with no exit loads so there is no premature withdrawal penalty of any kind.

    So, not sure, why Subra thinks FDs are more liquid than liquid funds.

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