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What is so awesome about liquid funds?

Mutual Fund Classification Out of many different ways of classifying mutual funds, one way is to classify it by asset class Equity funds Debt funds Hybrid funds Gold funds Others (Fund of funds, commodity funds, real estate funds, etc.) What are liquid funds? Liquid funds fall into category of debt funds. Liquid schemes or money market schemes are variant of debt schemes which invests in very short term debt securities. These funds can only invests in securities up-to 91 days of maturity.  If all these is going over your head, in simple terms liquid funds are the funds which are most liquid among all mutual funds. Reason for same being having neither early-withdraw-penalty nor lock-in-period. What is so special about these funds is that these funds have very very low risk. Practically, you cannot lose money in these funds. These funds offer you returns of about 0.02% every single day on your parked money. Liquid funds vs Savings accounts You might be t

When is Lump-sum investment better than SIP?

If you want to invest in mutual funds, there are two modes of investment. One is SIP and other is Lump-sum. SIP is generally considered better because it inculcates habit of 'disciplined' investing. But on some occasions Lump-sum might be better than SIP. Let's me show you when.  I've compared returns of a tax saver fund over a period of time using both SIP and Lump-sum mode of investment. In below table, one can observe growth of SIP investment and Lump-sum investment over a period of one year. We have considered SIP of ₹5000 per month for SIP and one time investment of ₹60,000 per year for Lump-sum investment. We observe that SIP investment of ₹60,000 grows to be ₹61055 at end of the year. But Lump-sum investment value changes according to time of investment. While lump-sum investments made early in a financial year fetches better returns than SIP, investments made after November gives less returns than SIP which is going on throughout the year.  @2017-18