What's the Real Cost of Parking My Money in a Current Account? How Do I Break Free from Zero Returns on Idle Cash?
Uncover the hidden costs of leaving your money in a current account over weekends and learn how to activate its earning potential.
A penny saved is a penny earned”. This age-old proverb holds true even today, especially when it comes to managing your business finances effectively.
Did you know? About 5 out of 12 months, the funds are lying idle with a business, and thus Business Owners, Trustees for Schools, Hospitals or Temples, are losing lakhs of Interest on treasury by keeping money idle in the current account.
The Convenience Trap of Current Accounts:
Current accounts are a staple in business operations due to their convenience for day-to-day transactions. However, this convenience comes with a significant downside – these accounts typically earn 0% interest.
This brings us to a critical question: “Why Keep Money Idle in Current A/C with 0% Return?”
In this blog, we discuss an effective way to efficiently utilize the funds lying idle in your current account earning 0% return. Our team of experienced CFA analyst believe that such funds should not remain idle. As small amounts add up to large sums over long periods.
Introducing the Weekend Parking Strategy
So, how do you break free from the shackles of zero returns?
Enter the “Weekend Parking Strategy.” This innovative approach is designed to efficiently utilize funds that would otherwise remain dormant in your current account.
Weekend Parking Strategy: A Deep Dive
We shift the idle funds from your current account into liquid and overnight funds that offer highs liquidity and earn interest during the non-business days. This interest quickly adds up over time and translates into significant earnings for your business.
Conclusion: Activating Your Funds’ Potential
In conclusion, liquid funds present an excellent opportunity to park idle cash efficiently. By parking your idle cash over non-business days, you enjoy the same level of liquidity and security while significantly boosting your returns. Don’t let your hard-earned money sit idle when it can work harder for you.
Remember, a penny saved is a penny earned, and the sooner you start, the more you stand to gain.earned money sit idle when it can work harder for you.
Connect with our CFA team to efficiently utilize the funds lying idle in your current account earning 0% return.
Frequently Asked Questions
Open-ended debt schemes with a one-day maturity that invest primarily in overnight securities. These offer a shorter time horizon than bank-specific investments, making them more attractive to investors who need access to their funds within a day.
Business Owner or Trustee for Schools, Hospitals or Temples, whose idle funds in current account are earning 0% return. We recommend parking the idle cash over weekends in overnight funds to earn higher rate of return on your idle funds while also maintaining high liquidity.
These funds typically invest in low-risk instruments such as T-Bills, Reverse Repo, and Triparty arrangements, which are considered safe investment options.
T-Bills (Treasury bills) are short-term government securities with a fixed maturity and considered safe due to the sovereign guarantee. Reverse repo refers to a transaction where banks lend funds to RBI against collateral, providing a secure investment option. Triparty arrangements involve a third-party custodian, ensuring the safety of assets and reducing counterparty risk.
Overnight funds may be redeemed quickly and easily by contacting the iVentures team or via our mobile application.
Starting 1st April 2023, the gains will now be added to your taxable income and taxed at the slab rate. However, these funds offer “deferment of taxes”, unlike FDs after Budget 2023. This means that investors can defer paying taxes on their debt fund gains until they sell their units, while they will have to pay taxes on their FD gains in the year that they earn them.