Emergency Fund Plan: Simply put, emergency fund corpus is like a cash reserve, which is kept separate from your other savings to face any sudden expenditure or financial emergency. If due to any reason you lose your job or other source of income stops, then only emergency fund can prove to be useful for this.
Even during the terrible corona epidemic in 2020, thousands of people’s jobs were lost. In such a situation, people who had an emergency fund, it was very easy for them to get out of this difficult time. Know from experts how a man should choose an emergency fund for himself?
How much fund to make,
Although there is no fixed rule for creating an emergency fund, but the ideal situation should be that the emergency fund of any person should be equal to 6 to 12 months of his monthly expenses. The most important thing in this is that your emergency fund should be deposited in such a medium from where you can withdraw money whenever you want. Such as savings account or mutual fund.
Do not keep emergency fund here
One should not put any emergency fund in stocks or bonds, as emergency funds are mostly used during recessionary times and stocks and bonds may be trading at lower prices during this time, giving you the opportunity to sell your corpus at a lower level. will have to be forced. These steps will reduce the value of your corpus, which may not be enough to cover your expenses.
how to create emergency fund,
Experts say that any person should determine his expenditure only when he withdraws the investment amount. Similarly, this should be the default equation if you want to manage your finances well. Just like you keep a percentage of your income for investing in stocks or bonds, on the same lines, you can also allocate a fixed amount every month for your emergency fund, which will keep your trouble easy.
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