Bangalore: Where do you keep your surplus cash or emergency funds? On asking this question, most savers would promptly answer that they deposit their liquid fund in a bank savings account. It is an age-old habit of people to park their cash in banks giving an impression that there is no other better option. Well, this is a common misconception.

A viable option to gain tax advantage, avoid huge interest rate risks and have better returns is investing in liquid mutual funds, reports Sameer Hassija of MorningStar. These funds are open-ended schemes that include Treasury Bills, Certificates of Deposit and Commercial Paper, and Pass through Certificate.

These short-term money market instruments follow redemption on T+1 basis, meaning, for all redemption requests submitted and time-stamped before the cut-off time, the payouts will be made to the investor the very next day.

Read More:

Travel Insurance Policy: A Foolproof Way To Minimize Financial Losses

Now Loans Against Fixed Deposits At Lower Interest Rates