The Concept & Advice on Parking Funds

By September 1, 2012 October 7th, 2014 Blog

Mr. Gerard Colaco: Parking has two aspects. One is emergency funding. The other is pure parking. You are already familiar with the concept of an emergency fund.

An example to understand what is meant by pure parking. Suppose you have sold a real estate property for Rs 40 lakhs. With this money you want to buy another piece of real estate. You do not know whether you will be able to get a satisfactory unit of real estate in a week or a fortnight or a month or 6 months. But, the moment you identify a satisfactory real estate asset, if the price is right, you will want to conclude the deal immediately. So, the period of your investment is highly uncertain. The investment must therefore be very liquid and be readily available when you require it.

Until the funds are required, they must be parked. The avenues for deploying emergency funds as well as the avenues for parking of funds are one and the same.

These avenues are:

  1. Current accounts.
  2. Savings accounts.
  3. Flexi-deposits with banks.
  4. Liquid mutual funds.
  5. Short-term mutual funds.
  6. Short-term floating rate mutual funds.
  7. Quarterly Interval Fixed Maturity Plans.
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