- Liquid Funds are debt funds which invest in short term fixed income generating securities with a residual maturity upto 91 days. They are an ideal option to park excess idle cash. Liquid funds have many benefits over F.D-- High liquidity- Liquid funds as the name suggests are highly liquid and can be redeemed at any time unlike F.D where you have to break the entire amount if you choose to withdraw before its maturity.- Potential for better returns- Liquid funds have the potential for better returns which can beat inflation unlike Fixed Deposits which give a fixed rate of return.- No exit load- Liquid funds if redeemed after 7 days have no exit load unlike Fixed Deposits which charge a penalty if the amount is withdrawn before its maturity.- Flexibility- Liquid funds have the flexibility of Systematic Investment Plan(SIP), Systematic Withdrawal Plan(SWP) , Systematic Transfer Plan(STP).