A Liquid Fund is a type of mutual fund that invests in short-term money market instruments to provide high liquidity and low risk.
Liquid Funds invest in short-term instruments like treasury bills, commercial papers, and certificates of deposit with maturities typically up to 91 days.
They are designed for investors who want to park surplus cash for a short period while earning better returns than a regular savings account.
In India, mutual funds are regulated by the Securities and Exchange Board of India.
"If you have ₹1 lakh idle for a few months, investing in a liquid fund can generate better returns than keeping it in a savings account."