Dear All,
I am looking to park a significant chunk of cash in either G-sec or Money market funds. Intent is to use the funds as cash margin while earning a little interest.
I would go for a G-sec but current prices are not competitive. Can someone advice on what is the advantage/disadvantage of G-secs over money market funds.
I can see the following advantages:
- G-secs have much lower expense ratio
- Minus expenses, G-secs still may offer better yield
- G-secs will increase in value once the interest rates start going down. So principal appreciation possible.
Disadvantages:
- Currently seems super expensive. Lower than expected yields
- G-secs have lower liquidity compared to money market funds. This is of low priority as I am not looking to sell anything.
- Money market funds have better tax treatment compared to G-secs that pay interest every six months
- The margin on money market funds increases automatically as the fund gains in value. G-sec margin remains constant.
Please help me out. Where should I invest?
Best Regards,
Sandeep