You’d talked about the need to have buffer funds in the broker account for rebalance owing to SEBI settlement rules. Can I keep buffer funds in any other form other than CASH in my broker account ? How much buffer fund shall be required ?

LIQUIDBEES is one good option which is listed on the exchange and does not require you to move your money out of the broker account. If you keep your balance elsewhere (FD or Mutual Funds), then liquidating it, and bringing the money in on time in the markets may be tedious.

You may consider parking your buffer funds in NIFTYBEES or GOLDBEES too if you want to take some risk on it. Though LIQUIDBEES invests in short term debt, it is not 100% risk free. Kindly read this article to understand more about LIQUIDBEES.

We would request you to refrain from any instrument that is volatile in nature as we would not want you to see any kind of reduction in the value of buffer funds.

Also note that the principle objective of buffer funds is to ensure a smooth rebalance and not to think about generating returns out of it. Kindly ensure you have 8-10% of your Smallcase investment’s current value readily available in your broker account as buffer funds to ensure a smooth, hassle free rebalance every time.

If you have any further doubts or questions, please send an email to support@weekendinvesting.com