Emergency fund allottment
What the title says. This might be covered previously by someone but would still like to ask.
How have you alloted your emergency fund and how much have you put together in case of a job loss?
Financial advisers have often recommended 6 months to 1 year of all expenses and then some extra to have a bit of peace of mind.
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Keep at least 3-4 lacs in FD, which can be liquidated any moment. That's like a true emergency fund.
Rest all your stock, mf etc can be used in case of job loss.
Noted but I guess touching your stock and MFs is the last thing one should do and that too only in critical emergencies. You wouldn't want to touch that compounding momentum.
My understanding might be different.
Goal of money is not to just sit and compound, it also should be used.. If you lost your job, with no active source of income would you want to sleep hungry or liquidate mf ?
Now there is no rule what should you liquidate first. Fd, mf, stock, bond,gold etc.. it all needs to be calculated mathematically at that time... Tax implications, exit load, loss etc..
Tbh alot of people say keep it in liquid MFs, FDs etc but I prefer to keep it in bank (with autosweep) itself because I want really easy access to it in case of any emergency.
Noted. Any specific formula you have in mind? Like 12x your monthly expenses?
6 months Expenses, 3 month EMI Have kept one arbitrage MF for it, but because I'm active in my investments, will withdraw 1 month expenses in advance from whichever instrument i like.
Emergency fund is just an earmarking of a portion of your investments. If things are bad for longer, you have to know where to take the next tranche from.
Thanks! Need to look into arbitrage MFs, any that you could suggest?
