What is liquid funds : we often hear about liquid funds. Such as is liquid fund better than fixed deposits?

Are liquid funds safe? Is it right to invest in liquid funds? How much do liquid funds return? In this article all the above questions and other queries about liquid funds are discussed clearly.

At first let's discuss about what is liquid funds? Liquid fund is one type of mutual fund. When the word 'mutual fund' comes to our brain we relate it with stock market,equities 

But here liquid fund is quite different from mutual funds. Liquid funds are the Debt funds. It means that liquid funds invest the fund in bond, government securities,debenture etc not in stock market.

All these are the debt instruments that return a fixed percentage. Think if any company wants to pick money from stock market then the company will say that please subscribe our bond or debenture 

Liquid funds invest in this type of bond or debt instruments. Now discuss about the reason behind the name of liquid funds.