Liquid Funds: a smarter parking spot

Liquid funds invest in debt maturing within 91 days — treasury bills, commercial paper and short deposits. They aim for stable, savings-account-plus returns with very low risk.

• Use: emergency fund, parking money between investments, or holding cash for an STP into equity.
• Liquidity: redeem in 1 working day (instant redemption up to ₹50,000 in many funds).
• Risk: low but not zero — credit quality still matters.

Taxed as debt: gains added to your income and taxed at slab rate (post-April 2023 rules).

→ See liquid funds.