Let’s know Which fund is best for emergency?
Maintaining an emergency fund should be part of your investment plan to remain well in the long run.
An emergency fund is the best option for avoiding such a situation in the future.
Our daily lives are characterized by one clear fact.
It doesn’t take long for danger to appear.
One thing is clear in our daily life. That is, danger comes suddenly. From the moment we wake up in the morning until we go to sleep at night, each of us spends the day in an invisible bond. This uncertainty remains even if we have a large amount of money or a good mind. Be it medical or any other need, raising a large amount of money for a sudden problem can become difficult. In such situations, temporary problems are solved by using savings for the future, but problems arise elsewhere. When the situation suddenly becomes complicated, money starts flowing like water. Sometimes there is nothing in hand for the next day. The purpose, for which the money was saved, remains unfulfilled.
The best option to avoid this sudden problem in life is an emergency fund. It is called an emergency fund in investment terms. These funds hold savings for the future as well as solve urgent problems. A review of the statistics shows that emergency funds play a very important role in every one of our lives to meet future financial stress. Keeping this fund with advance planning gives enough time on hand to deal with any eventuality. Apart from that, emergency funds can also be considered as a type of investment. This is why everyone should build an emergency fund based on income, expenses, and savings.
Remember, each of us is more or less aware of our future. Every person keeps aside the household expenses from his monthly income and invests some money from it in various sectors for the future. An emergency fund should also be kept in the future planning list without those investments and expenses.
How to create an emergency fund?
Creating emergency fund
Care must be taken while creating this fund that money from this fund cannot be spent for any reason other than emergencies. It is better not to even keep it in the savings account. Keeping these two key points in mind, the fund should be created by making perfect figures. According to experts, no problem lasts more than six months. In most cases, during this time the danger is gone or we find a way to solve the problem.
The rule of an emergency fund
The basic rule of an emergency fund is that six times your monthly income should be deposited in this fund. This emergency fund should save enough money to sustain the household for at least six months. That is, if a person’s monthly expenses are 50 thousand rupees, he should keep 3 lakh rupees in the emergency fund. Having an emergency fund will also help with short-term goals. These savings can be used to cover business expenses, medical expenses or financial stress.
Which fund is best for emergency?
Money for Emergency fund should be invested in places from which money can be easily withdrawn. General savings as cash can be deposited in bank accounts from which ATM withdrawals can be made using the card at any time. It can also be invested as a liquid mutual fund. Because the money of this fund is invested only in money market securities. This is why the risk in this investment is very low. Besides, emergency funds can be deposited in the form of fixed deposits or recurring deposits.
Categories of emergency funds
Like other funds, emergency funds can be divided into three categories—short-term, long-term, and medium-term. An investor can invest in all these different funds by analyzing the market. Remember, danger comes suddenly. That is why we should all be prepared. At least financially.