account why leave it idle? Find an appropriate way to invest it and earn a return, which beats the 4% average that most bank savings accounts offer.
Fixed deposits are an option, but don’t go for them till you have explored what is available in the debt fund universe. Debt funds are of varying types and it is not too difficult to find one that suits your risk-return requirements.
For your liquidity needs
As per the Reserve Bank of India (RBI) data, banks have over Rs100 trillion of deposits. Compared to this, debt mutual funds have only Rs10trillion in assets under management (AUM). While familiarity and assured returns may draw people to fixed deposits, they are beaten by mutual funds in terms of returns. Also, in some cases, debt mutual funds are more tax efficient.
