An emergency fund is not just a number. Structure liquidity in tiers so it supports shocks without disrupting investments.
A practical emergency corpus should usually cover 6 to 12 months of essential expenses, but the structure matters as much as the amount.
Use a tiered model: one month in savings account, two to three months in sweep FD, and the remaining corpus in high-quality liquid funds. This balances accessibility and return.
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Review the corpus whenever your lifestyle cost or loan obligations change. Emergency readiness should scale with your financial responsibilities.
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About the author
FinAtoZ Advisory Team