A person from India said that five days before the Dipawali Festival a large and heavy tree fell on my house and it damaged my house. This was a bitter experience just before the favourite festival of my family.
Many of our neighbors asked us how we were we able to handle that damages which need huge money immediately.
An emergency fund is a reserve money set aside to cover an unexpected financial emergency that comes in our life. These unexpected events can be stressful and costly. That’s why financial planners believe investors should keep aside 3-6 months expenses as an emergency fund.
Suppose your monthly income is INR 50,000, then you must have an emergency fund of approx INR 1, 50,000.
Unfortunately, you met some financial emergency and you don’t have an emergency fund then you have to take a loan.
Assume you took a loan of INR 1, 50,000 for 2 years at an interest of 15%. The monthly EMI of loan is INR 7273 and at the end, you had to pay excess money of INR 24,552 as interest.
Portfolio Distribution for Emergency Fund
- Electric Vehicle Stocks
- Personal Investment