As Warren Buffett aptly put it, “If you do not find how to generate money when you sleep, you will work until you die.” This line rings truer today in India than ever. With the rate of interest on traditional saving accounts between 2.5% and 4%, and the inflation rate remaining obstinate at higher than 6%, the actual return on the savings is not only low but actually negative.
In short, leaving your hard-earned cash in a savings account is not saving its value — it’s losing it. It is high time to wake up and let your money work for you, including during your sleep.
Let’s consider a simple example:
Real return is therefore 3% – 6.5% = -3.5%
This translates into the saving of ₹1 lakh in the savings account losing the equivalent of ₹3,500 in purchasing power per annum. Compounded, long-term, this is an enormous loss.
Liquid and short-term mutual funds are debt mutual funds that invest in short-term instruments. They provide greater returns compared to savings accounts but at relatively low risks.
Both are very liquid, with most funds offering same-day or T+1 withdrawals, which are essentially as accessible as an account at the bank — but providing higher returns.
This is an ideal setting for short-term debt funds with returns that are topping inflation and saving account returns — all within manageable risk.
Criteria Savings
Account
Liquid Fund
(Disclaimer: Always consult with your financial advisor first.)
Liquid Fund
Low Duration Fund
During a high-inflation, low-interest rate scenario, having your money sitting idle in a savings account is an unspoken wealth destroyer. It’s time for your money to sleep smarter — not harder. Investigate liquid and low-duration funds to generate inflation-beating returns and still keep your funds safe and within reach.
Take the first step – let money work for you, even when you are sleeping.
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