What is the difference between liquid funds, ultra short-term funds and short-term funds? I have Rs25 lakh as fixed deposits lying in my bank account for the purpose of my daughter’s wedding, which will take place in November 2018 (14 months away). Kindly advise where should I consider parking this money with minimum risk? I understand the money should be kept in debt funds but I am confused, which one to choose. Kindly also suggest a few schemes that I can invest in.
—Dileep Rana
All of these three categories of funds are debt funds that invest in debt instruments of different duration. Liquid funds typically invest in bonds that never exceed a 90-day duration, and hence are considered the safest of all debt funds. Ultra short-term funds have no such restrictions and they typically invest in bonds that mature any time within 18 months.
