Earn 2.5X more without taking extra risk. The secret lies in how you park your cash.
On 1st April 2024, Mr. Mehta quietly parked ₹10,000 in his savings account. “It’s safe,” he thought. “It’ll earn me some interest anyway.”
Fast forward to 1st November 2025 — 19 months later.
He checks his account and sees the balance has grown to ₹10,403.
A modest ₹403 in interest.
Not bad, right?
But here’s the twist — what if Mr. Mehta had instead parked that ₹10,000 in a low-risk overnight mutual fund?
The same period.
The same safety.
The same liquidity.
Only this time, his ₹10,000 would have quietly grown to around ₹11,026.
That’s nearly ₹1,026 in gains — almost 2.5X more than what the savings account delivered.
Why Do Savings Accounts Pay So Little?
Most large banks offer 2.5%–3% per annum on savings accounts. That’s barely enough to keep up with inflation — let alone grow your wealth.
The irony? Your idle money is far from “idle.”
The bank uses it to lend, invest, and earn — while giving you a fraction of the returns.
That ₹10,000 earned ₹403 over 19 months — roughly ₹50 per quarter. It’s safe, yes — but it’s also sleepy.
What Makes Overnight Funds Different?
Overnight funds invest in ultra-short-term, high-quality instruments that mature daily — often backed by government securities or AAA-rated collateral.
They typically mirror the RBI repo rate, offering 5% to 6% annual returns, without taking credit or duration risk.
You can redeem your money anytime, and the proceeds usually hit your account the next business day.
In essence, they offer:
Safety — backed by top-rated instruments
Liquidity — just a day away
Better returns — 2–3X that of your savings account
So, your ₹10,000 doesn’t just sit there — it works. Quietly, efficiently, and safely.
Safety, Liquidity, and Returns — The Perfect Trio
When it comes to short-term parking of your money, most investors look for three things — safety, liquidity, and returns.
A traditional savings account scores well on the first two, offering very high safety and instant access to your funds. However, it falls short on returns, yielding barely 2.5% per annum.
On the other hand, a low-risk overnight fund also offers very high safety, since it invests in short-term instruments that mature daily, and provides liquidity within one business day. The key difference lies in what it earns — these funds generally deliver around 5% to 6% per annum, nearly three times what a savings account offers.
Even from a tax standpoint, the growth option of an overnight fund can be more efficient over time, since it is treated as capital gains rather than regular interest income. This means your money not only grows faster but also gets to keep a larger share of what it earns.
In short, you don’t have to choose between safety, liquidity, and better returns — with overnight funds, you can have all three working quietly in your favor.
The Hidden Cost of “Safe” Money
The cost of keeping idle cash isn’t visible — but it’s real. Every rupee sitting in a low-interest account loses earning potential.
Let’s put that in perspective:
- On ₹10,000 → you lose ₹723 in 19 months.
- On ₹1 lakh → you lose ₹7,230.
- On ₹10 lakh → that’s ₹72,300 quietly left on the table.
The longer your money sleeps, the harder it has to work later to catch up.
The Smarter Move
You don’t need to chase high-risk investments to make your money work harder. You just need to be mindful of where it rests.
Keep your savings account for transactions and emergencies.
But shift your idle balance — the money that sits for months — into overnight or liquid mutual funds that offer better yields with the same peace of mind.
Let your money work while you sleep. Because while your bank may love your idle balance…your future self will thank you for putting it to work.
Final Thought
Your money has only two choices:
It can rest safely in your bank account.
Or it can work smartly — safely, efficiently, and consistently.
So, ask yourself — Does it make sense to let your money sleep when it could be earning 3X more, risk-free?
Simplified Money Talks 