Dec 22, 2016 3 min read

Excess Funds in Bank Account? It's Time to Think!

If you are confused between the various alternatives to make the best use of your excess money, then this blog is a must read for you.
Do you experience the dilemma of utilising surplus cash? Do you know how you can make the best use of idle cash kept in bank accounts? Let’s help you to find out the same.

Whenever we get surplus money from one or the other sources, we get confused in finding the best alternative to use it in a productive manner. One never wishes to put the entire surplus amount in the long-term investment schemes as s(he) never wants to compromise on current financial stability. Thus, one generally puts the idle money in bank accounts where one earns interest at the rate of 4-5% per annum. Let us explore another option available to the investors to make the excess cash more productive.

Liquid Funds: The Best Way to Utilise Idle Cash

The cash kept in bank accounts in the form of savings is termed to be the most beneficial alternative to secure money and get quick access to it. However, liquid funds are more effective and efficient option available to the money holders who aim to grow their idle cash in wealth. The liquid mutual fund is the mutual fund programme falling under the debt funds category which invests in the very short-term debt instruments and government securities providing high liquidity and better returns. The financial advisors always recommend the investors to put their idle money in these funds rather than in the savings bank account. Here are the reasons for the same:

  1. Liquidity: The funds in liquid schemes can be converted into cash on an immediate basis. It provides high degree of liquidity which makes investors not to compromise on the financial stability and lack of cash.
  2. Security of Funds: The investments by liquid funds are made in highly-secure government securities which do not involve fear of losing money. The interests are gained at a regular interval, and the funds are secure with conformity to grow higher.
  3. Higher Returns: The income on savings account of banks is generally around 4-6% per annum which depend on the bank we have chosen. In the case of liquid funds, investments earn returns at the average rate of 8-10% which has been proved in the past.
  4. Zero Lock-In Period: The lock-in period in case of liquid funds is nil, i.e., one can redeem the funds even after investing in the scheme on immediate basis within 24 hours. This provides the facility of a quick withdrawal of cash as per the requirement.
  5. Easy Redemption: The process involved in the redemption of the funds, in this case, is very convenient. One needs not get involved in lengthy proceedings to deal with the same.

These features of liquid funds make them a better alternative to park the excess cash in them. It would assist in earning better returns by investing the money in them. So if you own excess cash in bank accounts or elsewhere and want to make a productive use of it to enhance your earning capacity, then you must invest your money in the liquid funds.

If you need any assistance in selecting the right liquid fund for your investment, then you must take our financial advisory services. Our team at MySIPonline are ready to cater to your investing needs.

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