Saturday, May 21, 2011

Putting your Emergency Funds in FD's ?

Putting your Emergency Funds in to FD/s – now there is an option

Key principal for putting money into FD is quick access to emergency:
In India people are very familiar with FD’s as we feel, it is quick access in case of emergency, it is true in some sense, but now we have alternative to that, i.e. Liquid Mutual Funds or Floating Rate Mutual funds.

Particulars

Short Term FD’s

Liquid Mutual Funds
Emergency money planning
:
Not really as you can not break or withdraw It overnight
:
Yes – as you can withdraw it from any Visa ATM centre across the world.
Easy Access
:
No.
As one has to go to bank to withdraw the amount.
:
Access to all visa ATM* across the world, Online Access
Tax
:
Interest will be clubbed into your income & will be tax accordingly.
:
No Tax to pay directly by Investor if opted for Dividend Reinvestment option.
Penalty
:
Usually Charges are there if you break an FD before its maturity.
:
No Entry or Exit Charge
Small Investments
:
Generally in FD’s min amount is 5000
:
Here you can save even rs. 500 on monthly basis and enjoy all the benefits mentioned above.
Duration
:
Min 7-14 days of investment, varies from bank to bank
:
Easy Parking facility,
You will get interest on daily basis and can park your money for 2-3 Days also.

*some mutual fund offers ATM & online easy access in liquid/floating rate fund.