Recommended allocation to ensure liquidity and safety.
What is this plan for?
To create a stable emergency fund which should be worth about 4 months of your salary.
Plan for contingencies
To ensure liquidity in case of temporary loss of income, unexpected healthcare expenses, etc.
Protect your wealth
To avoid digging into your long term savings and investments to cover unplanned expenses.
Frequently asked questions.
How much money should I have in my Emergency Fund?
It’s recommended to keep a minimum of 4 months of salary as your Emergency Fund. If you have dependents (like family), then 6 months or more of your salary is a must. Since this can’t be built overnight, you need to start investing now and gradually reach the final amount. Having an Emergency Fund is a priority, you can cut down on other investments in order to first crisis-proof your future.
Will my capital be 100% safe in Emergency Fund?
As your money will be invested in Liquid Mutual Funds, your money will not really have down-market risks. These funds earn decent returns without being volatile. Historically, the growth has been in a range of 3% to 6% on an annualised basis.
In case I am in an emergency and want to withdraw from my Emergency Fund, how soon will I get the amount?
If you have placed a withdrawal request before the cut off time i.e. 1:30 PM on a working day, then the money will be transferred to your registered bank account by the next working day. In case the same is placed after 1:30 PM, then the money will be transferred to your registered bank account within the next 2 working days.