Fulfill short term needs; deploy money in ultra-short-term schemes

Written on Monday, August 17, 2015
By Team Bajaj Capital

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We all have a tendency of overestimating our short-term expenses and as a result our saving account has a certain amount lying idle. If we suggest you to invest the idle amount and the fund intended for your needs that may arise within a year, you would think twice. Today, in this blog we will explain you the concept of ultra-short- term schemes of mutual funds, so that you can utilize your idle saving funds and when the need arises, withdraw them easily within a short span of time.

Ultra short-term mutual fund schemes are designed to offer investors an opportunity to earn returns by investing in money market securities. There is a huge organized market of lenders where money is borrowed and lent for periods as short as one day, 14 days, 30 days and 3 months. These funds are commonly categorized as liquid funds, cash management funds and treasury funds. Investment in such markets can be preferred as they have a low risk profile and offer high liquidity to investors.

In case of short-term schemes, the minimum investment amount is slightly on the higher side, in most of the funds 5000 is the lower threshold. These schemes are meant to give high liquidity to investors and therefore, these funds do not have entry or exit load. However, it is important for investors to check it before parking money. In case an investor wants to redeem his money, he can do so by filling redemption form or by providing a written request directly to the principal company (Fund House) or to the financial advisor. Withdrawal process is generally completed in single working day and the amount is credited to the bank account of Investor.

Taxation in ultra-short-term schemes: If an investor pulls money before 3 years, the amount gets liable for short-term capital gain tax. But, the dividends received are tax free.

How to invest: Investment in an ultra-short-term fund can be made by submitting an application to the fund house or at any investment center of Bajaj Capital.

#Mutual Fund investment is subject to market risk, please read the scheme document carefully before investing. Nothing in this blog is intended to be a recommendation to buy or sell any futures or options market. 

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