Emergency Fund Corpus: The Corona pandemic has taught the world the lesson of emergency funds. If for some reason the job is lost or the source of income is cut off, emergency funds are the only help in such difficult times.
Emergency Fund Plan: Simply put, the emergency fund corpus is like a cash reserve, which is kept separate from your other savings to face any sudden expenditure or financial emergency. In case you lose your job or any other source of income for some reason, then only an emergency fund can prove to be useful for this.
Thousands of people lost their jobs in 2020 even during the horrific corona epidemic. In such a situation, it was very easy for those who had emergency funds to get out of this difficult time. Know from the experts how a person should choose an emergency fund for himself?
How much fun is it to make?
Although there is no fixed rule for creating an emergency fund, the ideal situation should be that an individual’s emergency fund 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 which you can withdraw money whenever you want. Like a savings account or mutual fund.
Don’t keep an emergency fund here
Do not put any emergency funds in stocks or bonds, as emergency funds are mostly used during recessionary times and stocks and bonds can trade at lower prices during this period, giving you an opportunity to sell your corpus at a lower level Get. will be forced to do. These steps will reduce the value of your fund, which may not be enough to cover your expenses.
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How to make an 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 to invest in stocks or bonds, you can also allocate a fixed amount every month for your emergency fund, which will ease your troubles.