Not any more. The Indian Mutual Fund industry now offers an instant redemption facility which allows you to keep your day-to-day or emergency money in an ultra-short term fund or a liquid fund. These funds earlier allowed you to redeem your money within one day if your request was submitted before 3 pm. Now you can get your money instantaneously at the click of a button, and earn a higher interest rate on it.

Some might argue that it is better to keep it in short term fixed deposits. However these instruments are not flexible - the term may be short but it is fixed and premature closures will attract penalties.

There are of course some caveats. The fund will typically stipulate a limit on the amount of money you can get at a moment's notice and it will also limit it as a percentage of your holding with the fund. However does that defeat the purpose of the offering itself? We think not.