FD vs Liquid Fund
I have a couple of lakhs saved up and I am looking for options to park them. I already invest in MFs using SIP and have deployed capital in other ways too, so the money I have right now is only meant as an emergency fund with no immediate goal in sight. I considered FD and Liquid fund as my options as I do want the ability of withdrawing funds if the need be. So what should I pick? Also, suggestions around which liquid funds will be helpful!
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Go for FD. Instant premature withdrawal is one advantage that FD has but liquid fund doesn't. Within FD you can check small finance banks that give higher interest. If it's supposed to be emergency fund then 1-2% less returns should not matter.
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Interest rates are expected to go down soon, so if it is possible, lock high rates with a long term FD now. In your SIP, add liquid funds and make it a regular investment instead of one time lump sum so you get an average purchase price