Overnight Funds: Is Your Idle Cash Earning 5.5%?

Overnight mutual funds invest your money for just one day at a time, making them super safe. Top funds are giving around 5.5% annual returns right now — better than letting cash sit idle in a savings account.

Here's what happened: Overnight funds are now delivering around 5.5–5.6% annualised returns, outpacing most regular savings accounts paying 2.5–3.5%.. These funds invest only in overnight securities — maturing in one day — so credit risk and interest rate risk are nearly zero.. Several fund houses including Bank of India, Franklin, and Bajaj Finserv offer overnight funds with no exit load and same-day or next-day liquidity..

What you should do: Compare: Check if your savings account pays below 4% — if yes, overnight funds are worth exploring for your idle buffer money.. Park smartly: Move your 1–2 month emergency buffer into an overnight fund via any mutual fund app like Coin, Groww, or MFCentral.. Review monthly: Overnight fund returns move with RBI's repo rate — revisit every quarter to see if liquid or ultra-short funds offer better risk-adjusted returns..

Overnight funds are taxed as debt funds — held over 3 years, gains get indexed. But even short-term, they beat savings account interest after tax for people in the 20–30% bracket.