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Do you want to earn something on your investment for just one day!?

Have you ever wished you could invest your money safely, even if it’s just for a day, and still earn something from it? Maybe you’ve received a bonus, sold an asset, or are waiting for the next big investment move. Instead of letting that money sit in the bank account, You can ask an AMFI registered mutual fund distributor in Chennai, such as Fairmoves, to assist you in investing in the overnight mutual funds.

What Are Overnight Mutual Funds?

Overnight mutual funds are a type of debt mutual fund that invests in short-term securities with a maturity of just one day. That’s right, just 24 hours!

These funds are popular among both new and seasoned investors because they offer high liquidity, very low risk, and stable returns. You can treat them like a supercharged version of a savings account. It can earn better returns without locking your money in for long periods.

How Do Overnight Funds Work?

Each business day, the fund manager invests the entire fund corpus into instruments like:

• Treasury Bills
• Commercial Papers
• Certificates of Deposit
• Reverse Repo Agreements

These investments mature the next day, which means your money, along with the interest, becomes available again. This cycle repeats daily. The idea is to minimise risk and maximise liquidity, making these funds ideal for short-term parking of idle cash.

A mutual fund distributor in Chennai can help you invest in the right overnight fund that fits your financial goals and liquidity needs.

Key Features of Overnight Mutual Funds

Here are the standout features that make overnight funds beginner-friendly:

• Low Risk: The fund only holds assets for one day, reducing exposure to market fluctuations.
• No Lock-In Period: Withdraw your money anytime, without exit loads.
• Better Returns: Typically, overnight funds offer slightly higher returns than standard bank accounts.
• High Liquidity: Access your funds quickly, often by the next working day.
• Low Expense Ratio: These funds are passively managed and usually come with a lower cost of investment.

Who Should Invest in Overnight Funds?

These funds are ideal for:

• First-time investors looking for a safe place to start.
• Salaried professionals who receive lump sum payments (bonus, rent, sale proceeds).
• Business owners needing to park money for a short duration.
• HNIs and corporates waiting for a better investment opportunity.

Taxation on Overnight Mutual Funds

Yes, overnight mutual funds are taxed like other debt mutual funds. Here’s how:

• Short-Term Capital Gains (STCG): If held for less than 3 years, gains are taxed as per your income slab.
• Long-Term Capital Gains (LTCG): If held for more than 3 years, gains are taxed at 12.5% without indexation.

So, if you’re investing for just a few days or weeks, you’ll likely pay tax according to your income bracket.

Important Things to Keep in Mind

Before investing, consider the following:

• Returns are not guaranteed, though they are relatively stable.
• Performance may vary slightly based on market liquidity.
• Choose funds from trusted AMCs with a strong track record.

Even though the risk is low, it’s still essential to read the scheme document carefully and invest only after understanding your risk tolerance.

Conclusion:

If you’ve been sitting on idle funds and wondering where to start your investment journey without fear of losing money, overnight mutual funds are worth exploring. They offer a safe, flexible, and smart way to begin investing. Overnight funds give your cash a chance to earn, even if it’s just for one day.