How to invest emergency corpus from where you can withdraw funds easily
emergency fund is your financial backup plan in case of unforeseen circumstances. This emergency fund can shield your long-term savings during exigencies.
Here is a look at how much money you should have in youremergency corpus and where you should invest it.
How big should your emergency fund be?
Financial planners usually suggest keeping aside six months' worth of expenses in your emergency fund. However, as with anything personal finance, this thumb rule can vary according to your own circumstances.
First things first, let us talk about health insurance. A health insurance policy of your own or a company given one can lessen the blow of a medical emergency, especially if it is a cashless insurance policy. However, you will have to have enough saved for instances where you or a family member may need doctor's visits, medical tests and even medicines.
Also read: 4 safe investments that offer higher returns than bank FD interest rates
Another factor that can play a part in deciding the size of your emergency fund is job security, i.e., how safe your job is, and how many earning members are there in your family.
Next, consider regular money outgoes like loan equated monthly instalments (EMIs), insurance premiums, mutual fund systematic investment plans (SIPs) and so on. The more such expenses you have bigger your emergency fund should be to take care of these.
Where to invest your emergency corpus
Before you read any further, keep in mind that when building your emergency corpus, returns take a back seat. What is important is the liquidity of the financial products you choose — they have to be available and easily accessible at short notice. So avoid investment products with lock-ins and those where you will be charged a
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