The question for this week @IndiaUnited Contest #16 is "What's your plan for an emergency fund?"

Expenses are sometimes unpredictable and you never know when it comes up and we have to be prepared to meet these unforseen circumstances. Between me and hubby we always work on saving 10% of our earnings on emergency needs. This is above our regular savings. Because we prefer not to disturb our regular savings, so its best to have some additional savings as emergency fund.

This fund we prefer to invest in a manner where we really do not bother for high returns but we look at how easy it will be to withdraw when in need. That's what the whole idea is that we can get it immediately when in need.

My preference is to invest in bank in short term fixed deposits. The rate of interest is pathetic, on short term fixed deposits with bank the rate of interest is just 3%. My other choice of other investment is to buy gold. Its easy to sell gold when in emergency. The other option is also SIPs in mutual fund, but here there can be a catch, if the market goes down then possibly in that time the investment anount can also go down. So then it is not a risk actually but for emergency fund will not work the best.

Source

4 years back I was in a situation when we had unexpected heavy expenses and we could use the gold that we had bought to meet those expenses. Since gold price does not have heavy fluctuations and eventually moves up so we could get some better returns on what we had invested. Selling a gold biscuit is easy and there's no deduction of making charges compared to what it will be when the gold is in jewellery form.

I always believe that small and steady monthly savings give big returns. Me and hubby have build our life completely on our consistent monthly saving over the years and now we are in a comfortable position in life where we dont havr to worry about finances. In the initial years we had a lot of struggle because we saved more then what we would spend and we crunched on our spendings. Today we feel that the effort was worth, now that we are getting old we are comfortable and we do not have money stress.

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