Idle money in savings bank account? 5 ways to invest and ensure liquidity
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Idle money
Investors often end up keeping funds idle in their bank savings accounts. This deprives them of the ability to make their money work for them. Here are some smart ways to utilise idle funds lying in the bank accounts while ensuring liquidity and relatively low risk. (Source: Content courtesy Centre for Investment Education and Learning (CIEL))
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Sweep-in fixed deposit
Sweep-in FDs automatically transfer surplus funds from a savings account to a fixed deposit, offering higher interest rates while maintaining liquidity. To set up a sweep-in facility, one can request it through the bank’s branch or via online banking. The bank links the savings account with FD.
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Money market mutual fund
Money market MFs invest in short-term instruments, offering higher returns than savings accounts and easy redemption options. Research liquid funds online or consult a financial adviser for guidance. Investments can be conveniently made through fund websites or mobile apps.
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Ultra short-term debt fund
Ultra short-term debt funds invest in instruments with maturities of up to one year, providing higher returns than savings accounts, with easy access to funds. These are ideal for those seeking a balance between returns and liquidity.
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High-interest savings account
Some banks offer high-interest savings accounts, with competitive rates and unrestricted withdrawals. Compare offerings from different banks to find the account that best suits your needs.
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Recurring deposit
Recurring deposits let you invest regularly, offering higher interest than savings accounts and keeping funds liquid. Open an RD at your bank’s branch or online, setting up auto debits from your savings account on a monthly or quarterly basis.