Invest your idle cash in liquid mutual funds to make it work for you. Money market securities with a residual maturity of up to 91 days, such as commercial papers, certificates of deposit, treasury bills, etc., are the main investments made by liquid funds. In our savings bank accounts, the majority of us typically have money sitting around.
We retain money in these accounts because we can access it anytime with a debit card, or we may use it to pay for other costs like credit card bills, utility bills, and other bills—either online or, in less and fewer cases, by check. But, retaining substantial quantities of money in our savings bank accounts comes with an opportunity cost. Savings account balances typically earn 3.50–4% interest from most banks, which is less than inflation.
So, Liquid funds offer the convenience of anytime money, investing in money market instruments with a residual maturity of less than or equal to 91 days. These funds provide higher returns on short-term deposits, making them a more productive option than savings accounts.
