Is there any lock-in period in Liquid Funds ? In Fixed Deposit or in Liquid Funds can my account be opened with a low amount ? what are the disadvantages of liquid funds ?
Liquid Fund comes with a maturity period of 91 days and generate varying returns but have no lock-in periods. Fixed Deposit is a type of deposit account where your funds are parked for a predetermined amount and tenure at a fixed interest rate.
Fixed deposits(FDs) can be opened with amount as low as Rs. 1000 the minimum threshold for liquid funds is usually Rs. 5000 . Fixed Deposit holders earn a fixed rate of interest during the tenure of the deposit, while the amount of return fluctuates in the case of liquid funds.
| Basis | Fixed Deposit | Liquid Fund | |
|---|---|---|---|
| Investment Ease | It is easy in Fixed Deposit . | Liquid Fund needs KYC. | |
| Returns | About 7%-9.75% | About 7%-10.5% | |
| Risk | FDs are considered extremely low risk investments. | Liquid Funds carry a relatively higher risk. | |
| Liquidity | Fixed Deposits offer liquidity but it comes at a price. | Liquid Funds offer better liquidity at lower penalty charges than FDs. | |