Overnight Funds vs Liquid Funds: Which Is Better for Short-Term Money? - Frequently Asked Questions

1. Are overnight funds safer than liquid funds?

Yes. Overnight funds invest only in one-day maturity instruments, which keeps credit and interest rate risk extremely low.

2. What affects overnight fund returns? Returns depend mainly on short-term interest rates in the money market. They remain stable but are usually lower than liquid fund returns.

3. Can liquid funds replace a savings account? For short-term parking over weeks or months, liquid funds may offer better returns, but they are not a complete replacement for a savings account.

4. How can I invest in liquid funds online easily? You can invest through any AMC website or mutual fund app after completing basic KYC and selecting the scheme and amount.

5. Which fund is better for STP into equity funds? Liquid funds are generally preferred for STPs as they tend to generate better returns over short periods.

6. Is there any exit load in overnight or liquid funds? Most overnight funds do not charge any exit load. Liquid funds usually have no exit load after 7 days, though a small exit load may apply if redeemed within the first few days, depending on the scheme.

Mutual Fund investments are subject to market risks. Read all scheme-related documents carefully before investing.