Where do you keep your emergency fund?
Kind of new to financial planning. Has anyone saved an emergency fund? How much should it be, and more importantly, where should I keep the money? I am honestly thinking about opening an FD from a reputed bank like HDFC or ICICI. Can anyone suggest me?
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Liquid or Arbitrage MFs are also a good option to have parked some amount there personally other than FDs
MFs?? For emergency? Wouldn't they face the problem of market headwinds too? And what happens if you need it urgently on a weekend/at midnight??
Liquid funds are not really linked to equities or have very minimal exposure, they are a low risk instrument and kinda tax efficient. You'd get similar returns as a FD
You can withdraw it anytime you want to through a portal or any broker app you might be using
I keep it in flexi FD, gives me a sweet 7% return (if kept for more than a year). It should be 3-12 months of your expense + more if you have dependents.
Voldemort style, spread it across different places - split between MF, FD and savings account.
Ideally emergency funds should be 6x or 12x of your monthly expenses.
I have kept it in 3 buckets, my total mandatory expenses are around 1.5L including loans.. I have kept 20L as EF( thought to have 10% higher than expense since here and there it may increase), So around 10L kept it in Arbitrage fund since tax is less and I and my wife are at high tax bracket, 5L in FDs just that it has liquidity and 5,L in savings account.. also have some 25K in cash also just to be covered in all aspects
I try to keep 1.5L in my savings account. Rest all goes to MF and FD. I have SIP for MF, and for FD I wait till I accumulate 2.5L to 3L and then create FD
IMO it's an emergency fund and not an investment. So best to keep it safely parked in a savings account only. I've kept ~6-8 months of expense as emergency fund
Cash
Try Stable Money the interest is higher for Small Finance Banks and the amount is insured upto 5 lakhs. https://stablemoney.in/
Don’t put everything in one place. Keep some in FD. Keep some in RD. Keep some in small finance banks like Jana Bank or Ujjivan for better interest rates and to ensure liquidity. Put some in liquid funds.