Where should I invest the money that I have earmarked for emergency needs and how much should this amount be? Should they be kept in Savings account only?
-JInendra Athane
Emergency fund ensures that an unforeseen event does not upset your financial plans in a big way. The fund should generally be large enough to cover the monthly household expense of three to six months.
It should be kept in liquid investment avenues like bank deposits, savings account with sweep in facility or liquid funds. You can keep some portion of the corpus in a sweep in facility that can be liquidated easily. The other portion can be kept in a liquid fund where you would get the money on a day's notice.
This article was originally published on September 07, 2016.
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