Overnight Funds

Who should invest in overnight mutual funds?

• Risk-averse investors

  Overnight funds offer very low risk due to their short-term investments. This makes them suitable for investors who prioritize capital preservation over high returns.

• Investors with short-term goals

   If you're saving for a short-term goal like a vacation or down payment, overnight funds can be a good option. You can easily access your money when you need it, while potentially earning a bit more than a traditional savings account.

• Those with emergency funds

  Overnight funds are a good way to keep your emergency fund readily available while still earning a small return.

Limitations of Investing in Overnight Funds

While overnight mutual funds offer several advantages, there are also some limitations to consider

• Low Returns

  Since overnight funds invest in very low-risk securities, their potential returns are also on the lower end compared to other debt funds or equity investments. They might not outpace inflation, meaning the purchasing power of your money could decrease slightly over time.

• Not Ideal for Long-Term Goals

  Overnight funds are best suited for short-term investment horizons. If you have long-term goals like retirement planning, you might want to consider options with the potential for higher returns, even if they come with some additional risk.

• Tax Implications

  The returns from overnight funds are taxed as short-term capital gains if held for less than 3 years in India, which can be slightly less tax-efficient compared to long-term capital gains from other debt funds.

• Management Fees

  Like any other mutual fund, overnight funds also come with expense ratios that cover management fees. While typically low, these fees can eat into your already modest returns.

• Not a Substitute for a Savings Account

  While overnight funds offer some advantages over traditional savings accounts, they shouldn't be considered a complete replacement. Savings accounts might still be useful for everyday transactions due to features like debit cards or check writing, which aren't typically available with overnight funds.

How to start investing in Overnight Funds with INDmoney?

Now that you have understood what is Overnight mutual fund, you need to know how easily you can start your investment with INDmoney. Just follow these simple steps given below, to start your mutual fund investment journey with us.

• Step 1

  Download the INDmoney app and create your free investment account by completing your KYC ( Know Your Customer).

• Step 2

  Once your Free investment account is ready, you can either search for a Overnight mutual fund or go to the mutual fund section and tap on Overnight mutual funds.

• Step 3

  Choose a Overnight Mutual Fund by looking at aspects like past returns, volatility, downside capture ratio, AUM, Expense ratios and underlying stocks and sectors.

• Step 4

  You can choose to set up SIP in Overnight mutual funds or even invest as lumpSum. Once you are on the individual Overnight mutual fund page click from the bottom “One-time” for lump sum investment or “SIP” for systematic investment plan. 

• Step 5

  Choose the amount that you want to invest as SIP or LumpSum.

• Step 6

  Set up payments. If you choose to set up SIP in Overnight mutual funds,  you can do a free automatic pay set up via bank mandate or UPI. If you choose to invest in lumpsum (one-time) then you can pay via UPI, netbanking, NEFT or RTGS.