Create Emergency Fund: The second wave of corona virus in the country has once again started to have a profound impact on the economy. Many states of the country have many lockdown-like situations. Many essential services have been closed from markets, offices, shopping malls, theaters, autos, taxis. In such a situation, there is an impact on the work and employment of the people. This was the case in the first wave of Corona last year, which has affected the income of crores of people. It is becoming difficult for many people to drive home. Experts say that such a situation can come anytime, for which it is necessary to think about creating an emergency fund.
AK Nigam, director of BPN Fincap, says that an emergency fund means investing money in a place where there is no block for a long time. Liquidity should not be a problem as soon as it is needed. In such a situation, new investors should invest in debt funds through SIP in the current situation. Among these, overnight funds, ultra short term and short term funds are the better options. At the same time, liquid funds are also a better option. At present, it is difficult to estimate the stock market. Therefore, the option of safe investment should be looked for.
Overnight fund
It is a debt fund that invests in maturing bonds in a day. Bonds are purchased at the beginning of every business day, which are matured on the next business day. Overnight funds are a better option for those seeking safe returns, where maturity is of 1 day. Due to 1 day maturity, the risk is reduced here due to investing 100% in the collateralized borrowing and lending obligation market. However, due to 1 day maturity, the returns in them are somewhat less.
Ultra short term fund
These funds invest in debt and money market instruments for 3 months. In these, if you check the returns of different funds, then in 1 year, investors have got 9% return.
Short Duration Fund
Money is usually spent for 6 months to 1 year. In these, if you check the returns of different funds, then in 1 year, investors have got returns of 10 to 129 per cent.
Liquid fund
Liquid funds act like a savings account, where money can be withdrawn easily if needed. These are open-ended funds, which invest in debt and money market instruments for 30 days to 91 days.
1 year FD
There is also an option to FD for 1 year. In most banks, the minimum FD starts at Rs 1000. The maximum amount can be anything.
Recurring Deposit (RD)
The post office is getting 5.8 percent interest annually on RD. At the same time, interest is getting between 5 and 6 percent in different banks. RDs with a duration of up to 1 year can be extended up to 10 years.
(Source: Website of Value Research, Bank Markets and India Post)
(Disclaimer: Financial Express does not recommend any type of investment. Before investing, check at your level or consult your financial advisor.)
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