What is the most appropriate investment for emergency funds?

A high-yield savings account might be the best place to keep your emergency fund. Not only are your funds accessible in this type of bank account, but you’ll also earn interest on your deposits.

Which type of account is best for emergency savings?

Emergency savings are best placed in an interest-earning bank account, such as a money market or interest-earning savings account, that can be accessed easily without taxes or penalties.

Are liquid funds a good choice to park your emergency corpus?

Even though an emergency fund should be liquid, it is not something you can access often. Hence, invest it in a manner that you earn decent returns from it without compromising on liquidity. The ideal thing to do would be to spread the emergency fund across liquid funds, short-term RDs and debt mutual funds.

Should I park my money in liquid fund?

Liquid funds are an excellent option to park your idle money. These are low-risk havens that offer higher returns than a regular savings bank account. These funds don’t have a lock-in period. You can use liquid funds as a regular savings account and earn higher returns.

Which is the safest liquid fund?

Liquid Mutual Funds vs Liquid mutual funds have lowest interest rate risk and default risk. They are highly liquid and can be redeemed within a day. Hence, they are ideal for parking short term surplus cash or creating an emergency fund. Liquid mutual fund is the safest type of debt fund in India.

Which liquid funds are best?

The table below shows the top-performing liquid funds based on the past 3 and 5-year returns:

How do I choose a liquid fund?

For this reason, you should choose liquid funds that are large. These can handle redemption pressures better than liquid funds with smaller AUMs. As a rule of thumb, you should invest in a liquid fund which has an AUM of at least Rs. 20,000 crores.