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This is a really interesting question, how to take the decision to move money in the liquid fund? Assume you got your salary of Rs 1,00,000 in your account on 1st March 2018, you know your expenses for the first 10 days are around 30,000 and after that you know that you need to pay EMI of 50,000 on 20th of every month, in such case you can move 50,000 in your liquid fund and request for withdraw fund by 17th or 18th depend on working days calculation, so fund will be available in your account on 20th. That way you will get a better return of your 50,000 in liquid funds.
In general, you should park your surplus fund in your liquid fund. Liquid fund by the name itself is liquid cash and can be withdrawn with one single request. There are no additional charges or withdrawal fees in a liquid fund. This is like you are creating FD of your fund just for 1 day or more.
Some smart investors move their surplus funds in liquid funds on Friday with back to back refund request, so they earn 6-7% interest return of surplus fund over the weekend, and get money back in a bank account by Monday to be used.
For more details about Liquid fund investment please visit Article - Saving Account vs Liquid Fund Investment.
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Zerodha Trade@20
