Emergency Funds – Why have it, How to Build & where to Invest.
An emergency fund is an essential corpus that you must keep aside to tackle emergencies.
It is a fund that you can fall back on at the hour of crisis or for unexpected and unplanned scenarios in Business as well as your Personal life.
1. How to Build an Emergency Fund? An emergency fund cannot be built overnight but is done gradually.
Set aside a particular amount every month. Soon it will grow into a considerable corpus that you wish to have.
2. How much should your Emergency Fund have? Depending on your income and expenses, an emergency fund can be three to six months of your monthly expenses.
3. Where to Invest in an Emergency Fund? The emergency fund should be parked monthly to a Liquid Fund with no exit load. Don’t forget to put a small portion in a bank account that is available 24/7.
The economic crisis is a vivid example of why an emergency fund can be so important. If you don’t yet have an emergency fund, now is the time to prioritize it.