Short-term cash parking in India: comparing 2-month funds, arbitrage funds, and FDs for ₹2 lakh

Two months, ₹2 lakh, and zero stock risk. The chatter clearly leans toward debt-backed options for this horizon, not equities ^[1]. Here’s how the main bets stack up for a safe, liquid parking spot.

• Liquid Funds – Invest in very short-term debt instruments; the move many recommend for a 2‑month window. You can dump the full ₹2L into one or two solid Liquid Funds (e.g., SBI Liquid Fund is a commonly cited pick) for minimal risk and quick access ^[1].

• Arbitrage Fund – Offers a bit more yield with relatively conservative risk, often cited around 7–9% principal in this discussion. It’s safer than longer debt funds but isn’t completely risk-free ^[1].

• Short-term Debt Funds – A step up in yield versus liquid funds, but with increased price/interest-rate sensitivity. Expect more NAV moves than a pure liquid fund ^[1].

• FDs (Fixed Deposits) – The go-to for capital safety over a 2‑month window. If liquidity isn’t a big constraint, an FD is often recommended when safety is the priority ^[1].

• Quick tactic: STP from a Liquid Fund into other funds can help manage entry timing and risk, a pattern some investors use to ease into markets without locking everything up at once ^[3]. And debt-based choices are often discussed as offering steadier income, around 6–7% in some threads, though safety varies by instrument ^[2].

Closing thought: for 2 months and ₹2 lakh, lean toward Liquid Funds or a short FD for safety and liquidity; Arbitrage Funds can add a bit more yield with caveats ^[1].

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