Which Are The Best Mutual Funds For SIP in Short Term?

When it comes to investing, most people want two things: flexibility and good returns. If you're just starting or looking for a place to park your idle cash, liquid funds can be an excellent option.

 Many beginner investors are unsure of where to begin, especially when they don’t want to take high risks or commit to long-term lock-in. In that case, ACE Financial Services is the best SIP provider in Kolkata and can help you with your first time investing. 

This is where liquid funds step in and offer a balance between safety, liquidity, and earnings.

What Are Liquid Funds?

Liquid funds are a type of mutual fund that invests in short-term debt instruments with a maturity period of up to 91 days. These include government securities, treasury bills, and other low-risk money market instruments. The goal is simple: earn reasonable returns while keeping your money easily accessible.There is no lock-in period with liquid funds, which means you can withdraw your money whenever you need it. That’s why they are often considered a better alternative to keeping excess money in a savings account.

Benefits of Liquid Funds for Beginner Investors 

1. Easy Entry and Exit

One of the biggest advantages is that liquid funds allow you to enter and exit without any penalties. There's usually no exit load if you redeem after a few days, and in some cases, you can e\ven receive the redeemed amount on the same day.

2.   Better Returns Than Idle Money

If you have some lump sum amount that you don’t immediately need, parking it in a liquid fund can help grow your money at a certain rate. Even though the returns are not guaranteed, they have historically been better than what you’d earn from just keeping your money in a bank.

If you're searching for the best mutual funds for SIP in Kolkata, many of the top-rated funds also include liquid fund options. These are especially helpful when you’re planning to transition your investments into higher-return funds over time.

When Should You Use Liquid Funds?

Liquid funds are not designed for long-term corpus creation. Instead, they are best used in situations like:

• Saving for short-term goals (vacation, gadgets, wedding expenses, etc.)
• Parking idle money you don’t need immediately
• Building an emergency fund that earns better than a savings account
• Staging area for investing in equity funds gradually

How Do Liquid Funds Work?

Here’s a simple breakdown of how liquid funds operate:

• You invest your money (either a lump sum or SIP)
• The fund manager invests it in low-risk, short-term debt instruments
• You earn returns as interest income accumulates
• You can withdraw anytime, with some platforms offering instant redemption features

With digital banking improvements like UPI and real-time transfers, redemptions are now processed faster than ever. This means your money stays liquid, yet productive.

Conclusion:

Liquid funds are not just an alternative to savings accounts, they’re a smart investment tool for people who want both flexibility and reasonable returns. As a beginner, you don’t need to take big risks to start investing. All you need is the right knowledge and a platform that helps you move forward one step at a time.