Life is full of uncertain circumstances. So, it’s imperative to build a fund that can save you at times of emergencies.
Emergency Funds are set apart from other savings, as it can help you to handle unfortunate circumstances like job loss, loss of family members, or medical bills.
So, it’s always prudent to keep your emergency funds separate and manage it in a consistent manner to backup your expenses at times of emergencies. Here are some possible tips to deal with emergency funds in case you’re in need of extra funds at a different point of time.
Top places to keep money for Emergency Fund:-
The traditional approach of saving funds has its benefits during a crisis. But you can look out for an emergency with higher rate of interest or even without any heavy fees which may take you out in your unlucky days more viably and effectively.
- Money Market Funds
One of the high-yield savings option, These are low-risk investments that invest in short-term, high-quality debt. They generally offer higher interest rates than traditional savings accounts, but still provide easy access to your funds. You can invest money market funds in through the bank, online investing app or financial institutions. The average return of money market funds can reach from 5 to 7% if you have a higher risk appetite.
- Debt Mutual Funds
Debt mutual funds can facilitate low risk than other equity investments. However, can reach from short-term investment of 3 to 12 months or even medium term investment of 3 to 5 years. If you invest on a regular basis monthly payout can be a dynamic bond and even better than FDs.
- Certificates of Deposit
Certificates of deposit (CDs) another instrument for emergency funds that you can give your money for a specific period for better return rate. You made your money before it matured but you had to pay a withdrawal penalty at that time for CDs.
- Fixed Deposit
One way to save emergency funds is by investing in fixed deposits (FDs). FDs are a popular investment option in India, and they are considered relatively safe and stable, making them a good option for those looking for a low-risk investment. They offer a fixed rate of interest over a specific period, and the principal amount is guaranteed by the bank or financial institution.
Overall there are many ways you can save your money for emergency accounts. In a traditional bank account you may not find as much interest but you can access it immediately or anytime. On the other hand, in the case of a mutual fund deposit, you can get higher returns in your money but you can get the results.