Why Choose Reliance Liquid Fund Over Savings Bank Account?
Still stuck to a savings method which is thousand years old? If you are living in the 21st century and still following the banking system, then you need to know about what you are missing out! The multiple benefits of Reliance Liquid Fund will refashion your investment strategy.
Though the banking system is thousand years old, it was officially introduced in 1770 in India and hasn’t changed enough since then. Today, the regular bank savings account provides 3.5-4% returns on an average. Prominent banks like Axis, ICICI, SBI, PNB, HDFC, Bank of Baroda etc. provides upto 4% annual returns on the deposits. A majority of the population in India is unaware of the fact that 4% yearly return is far below the worst performance of Reliance Liquid Fund.
Role of Reliance Liquid Fund
It is one of the most trusted mutual funds in India which has assets under management of nearly Rs 40,000 crore (as on 30th June 2018). The reasons behind the foolproof trust of the investors are the past performance and the robust support of Reliance Mutual Fund. It is one of the largest AMCs in the country and provides an optimum solution to every financial need of the investors.
The fund is suitable for the investment of short period as the average maturity period of the instruments in which the fund manager Ms Anju Chhajer invest is 1-2 months. If you want your extra cash after a few weeks or months, then it is the best platform where you can gain a much superior return as compared to a regular bank deposit. The annual growth has been above 8% for most of the years since inception and has even reached above 9% many times in the past. Most of the debt instruments in which the fund manager invests are of A1+ credit ratings which ensures the safety of the corpus. The majority of the corpus is used to buy commercial papers, fixed deposits, treasury bills, and certificate of deposit.
How is Reliance Liquid Fund Better than Savings Account?
Let’s understand with an example
Suppose you have invested Rs 1,00,000 in Reliance Liquid Fund and kept Rs 1,00,000 in a savings bank account three months ago. Since Reliance Liquid Fund is suitable for the investment of 3 months, we will take the scenario of three months.
The NAV of Reliance Liquid Fund has grown by 2% in last three months which means the investor would’ve gained Rs 2,000 within three months.
On the other hand, if we calculate the returns of regular bank deposits at the annual rate of 4% for 90 days then,
90/365 * 4/100 * Rs 1,00,000 = Rs 986.3
Hence, the gains obtained through Reliance Liquid Fund will be Rs 2,000 and through savings bank account will be Rs 986.3 on the investment of Rs 1 lakh for last three months. A smart investor needs no further explanation for which investment strategy is a better option. To provide lesser returns than the bank deposit the fund has to generate less than 1% gain in a quarter which is not even close to the worst case scenario of Reliance Liquid Fund. It has never produced less than a 1.6% gain in 3 months which has also gone as high as 2.6%. (data as of 16th July 2018)
Why is it known as an Emergency Fund?
It provides the facility of insta redemption i.e. you can withdraw your money from Reliance Liquid Fund within 30 minutes. A maximum of Rs 50,000 or 90% of the redeemable amount whichever is lower, can be withdrawn at a time. A maximum of Rs 50,000 or 50% of the redeemable amount whichever is lower, can be withdrawn from any VISA enabled ATM through Any Time Money Card offered by Reliance Mutual Fund. You can download the app of MySIPonline to place your request for insta redemption.
According to the AMC’s policy, if the application is received before 3 PM on a working day then NAV of that day or the previous day, the lower one will be considered, and if redemption is received after 3 PM then the NAV of that day or the next day whichever is lower will be taken into consideration. This facility allows the investor to withdraw anytime at their fingertips just like the banking system.
Reliance Liquid Fund provides high liquidity by charging a minute annual expense ratio, i.e. 0.22% as of 31st May 2018 and no exit load. Hence it is a perfect platform to invest the corpus for a short time and enjoy the most beneficial and safest growth of your hard-earned money. For any detail, regarding the fund and the investment process, our experts are on their toes to assist you anytime. Millions of investors have revamped their investment strategies with MySIPonline. Have you?
- This Independence Day, Let's Pledge for Freedom from Financial Worries1556 min read Aug 14, 2018
- Are Balanced Funds Better Than Balanced Advantage Funds?2984 min read Aug 02, 2018
- 7 Points to Ponder While Investing in Small Cap Funds5093 min read Jul 19, 2018