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What are the options for parking my emergency funds?

'Keep some cash at home and in the savings bank account,' says Dhirendra Kumar


Answer transcript: It depends on the scale of emergency and the kind of emergency that you anticipate. There should be 3 to 4 layers of emergency fund. For example, if your young kids or old parents are living with you, you should have some money in your locker, which won't fetch any return but give you great comfort. Then, in the next layer, you should have a small amount always in your savings bank account which can be in the way of sweep-in facility and hence accessible through ATM. If you have health & life insurance this need can come down substantially. Then the next layer of emergency fund can be in ultra-short term or short term debt funds. These are available for withdrawal at a short term notice. They can also be a long term money lying there but it is accessible anytime and without any uncertainty of declining value.

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