Liquid funds invest in very short-term debt; overnight funds mature the next business day — both aim for stability and quick redemption, with modest returns above savings accounts.
They suit emergency buckets, business working capital parking, or staging equity SIPs — holding them for retirement decades bleeds to inflation.
Credit risk is lower than long bonds but not zero if funds stretch for yield; read factsheets for credit quality and single-issuer caps.
Taxation on gains follows debt mutual fund rules applicable in your filing year — verify holding periods and indexation eligibility when rules shift.
STP from liquid to equity smooths entry, but STP is psychology as much as arithmetic — set it and ignore daily NAV noise.
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