Where should one park one's surplus money for short-term needs? | Value Research Dhirendra Kumar suggests a plan for parking for short-term needs
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Where should one park one's surplus money for short-term needs?

Dhirendra Kumar suggests a plan for parking for short-term needs

Being a doctor, my paychecks are irregular, and the amount also varies. Some hospitals even pay on a quarterly basis instead of a monthly cycle. So where should I park the money for short-term needs when I receive an excess amount?
- Sarthak

There are two ways of doing it. One is, by parking in a fixed-income fund conservatively, say a short-term fund or an ultra-short-term fund. This way, he can get his money at two-three days' notice. The other way of managing money to derive comfort is by building an emergency fund. He should keep investing his monthly income requirement by keeping it aside in a fixed-income fund till a point he has one year's income requirement lying there. Once he has done that, all his regular income will actually become his long-term investment and periodically, he should keep supplementing his monthly income requirements. So effectively, he will have one year's income requirement lying in a fixed-income fund and he will be free from any anxiety about whether or not he will have enough money when he needs it. Once in a while, he can keep supplementing a small part of it into his income allocation and keep extending that period from one year to another six months, as and when he has a greater support surplus.

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