5 Saving Investment Options For Emergency Fund

Emergencies can strike any time and cause financial distress in the process. A sudden job loss, a medical exigency or a temporary disability due to an accident can arrive unannounced disrupting your finances. Hence, financial prudence calls for setting up an emergency fund to ensure you can take care of your day-to-day requirements and address your liabilities. Here are 5 saving and investment options for building an emergency corpus.

  1. Savings accounts

A savings account in a bank is one of the most easily accessible and easy-to-operate means to save cash. If you have a savings account debit card, you can use it to pay expenses, and even withdraw cash as per your need.

Just ensure that you don’t exceed the daily withdrawal limit. Though, interest earned on savings account is a little over 3%, there are several banks that offer a higher rate of interest.

  1. Auto-sweep savings accounts

Auto-sweep savings accounts park excess cash, above a certain limit, into a fixed deposit (FD) leading to higher interest inflow. However, make sure you don’t make frequent withdrawals as this would erode the rate of interest earned. Also, note that the interest rate is calculated on the number of days the FD was with the bank.

Best Investment Plan

  1. Fixed deposit

A fixed deposit is one of the best investment options to park your money for an emergency fund. You can save the money for a pre-determined tenor and get better interest on it compared to both, savings accounts and auto-sweep savings accounts. FDs can be easily liquidated when required.

  1. Liquid funds

Liquid funds are among the best investment options in India for your emergency fund. They don’t have a lock-in period, are easily accessible, and offer decent returns. You can even get ATM cards with certain liquid funds that allow easy withdrawal of your money.

  1. Short-term debt funds

These funds are another good savings and investment option you have. They offer better returns than most financial instruments mentioned above. However, the money will reach you within 1-2 working days.

Lastly, remember to review your emergency fund at least once a year, and replenish it regularly to be able to meet emergencies on time. Prior to setting up an emergency fund, make sure that it can be easily liquidated and accessed. Parking your money in financial instruments that are highly non-liquid wouldn’t serve your purpose.

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Article Posted By : sidharthkapoor116lView All Articles

Myself Sidharth Kapoor is a well-known financial insurance advisor.He has worked on different financial sectors dealing with the entire range of Insurance like health Insurance,life insurance,personal accident insurance and also contribute as a writer at everythingoninsurance blog more.

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