Emergency Fund: The COVID-19 pandemic and the consequent lockdown have made it clear that emergencies can strike at any point in life and it is important to prepare well in advance. Due to this, awareness has increased among people about the importance of money management and emergency funds. Experts believe that everyone should keep an emergency fund to deal with any sudden emergency like job loss, medical emergency etc. You can keep an emergency fund depending on your financial capacity, so that you can deal with any kind of emergency and during this time your investment goals are not affected. Now the next question is, how much should be your emergency fund and where should you keep it?
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How much should be the amount in the emergency fund
Generally, financial experts believe that your emergency fund should have enough corpus to support you for 6 to 12 months. You may find it a bit difficult at first, but experts say that you can achieve this goal with small savings and gradually increase it. While saving for an emergency fund, it is important to keep in mind that what is your age, how many people in the family depend on you and what work you do. Actually, how much your monthly expenditure will be, it depends on these things.
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Where to keep your emergency fund
Industry experts say that after accumulating emergency funds, it should be invested in liquid funds, debt mutual funds and short term RDs. Experts believe that no one should keep their emergency fund in the form of cash or in a bank account. It should be invested in such a way that it gives good returns and can be easily withdrawn when needed. During the COVID crisis, people had to use a huge amount from their savings. Due to this, awareness has also increased among the people about life / health insurance schemes. Keeping the situation in mind, policies like Corona Kavach were also introduced to cover diseases related to COVID-19.
Experts say that it is also important to choose the right insurance policy, so that it can be used as an emergency fund in case of emergency. Keep in mind that the right insurance policy can help you be prepared for an emergency. However, experts believe that despite having a health or life insurance policy, a separate emergency fund should also be kept.
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