Liquid funds are debt mutual funds that put money into highly liquid money market instruments, maturing in up to 91 days.
They're perfect for investors with extra cash, aiming to temporarily invest without sacrificing returns.
Debt mutual funds invest mainly in fixed-income assets like government and corporate bonds, along with money market instruments.
They're a good fit for investors looking for consistent returns and comfortable with moderate risk.
Tenure Liquid Funds: Less than 91 days. Debt Funds: Few months to a few years.
Risk Liquid Funds: Comparatively less risky than debt funds. Debt Funds: High level of risk.
Returns Liquid Funds: Offer less returns than debt funds. Debt Funds: Offer comparatively more returns than liquid funds.
Liquidity Liquid Funds: One can exit anytime without paying any charges Debt Funds: Limitations on the frequency of redemption .