Life is a roller coaster ride. It throws up new challenges every day. Apart from the daily hurdles, emergencies can also happen. And these can come without informing anywhere anytime.
A friend recently lost a job. The company he was working in took its business elsewhere. The dues were not settled for more than 4 months. New job was difficult to find. He was so cash strapped that he had to move out of his apartment into a friends apartment. Job losses do occur.
Another friend had a 4 month year old son when his wife was taken ill. Immediate surgery was suggested for gall bladder stones. He was already paying EMIs for his home loan and personal loan that he had taken for his sister’s wedding. He had to ultimately borrow money from relatives to ensure that his wife went through surgery in time. Medical emergencies can take you by surprise.
Despite a steady income, there are chances that you may need extra funds for unpredictable events. At such times, our skills and acumen are tested.
And here lies the catch. It is the decisions made during sunshine are the ones that help us sail through rough weather. As they say, one must save for the rainy day. Mutual Funds offer an easy solution for emergency financial woes.
An emergency corpus fund via investment in Mutual Funds can help to meet expenses during turbulent times
This fund not only takes care of your finances during emergencies, it saves you from lots of added troubles. It saves you from the embarrassing situation of borrowing money from friends, relatives, taking personal loans or even breaking down your own Equity Mutual Funds or Fixed Deposits that you had planned for long term financial goals. As a result, you can simply enjoy life stress free, knowing that under any dire circumstances, if they arise, your financial needs are well taken care of. That is the greatest advantage of creating such an emergency fund.
So, how to go about it?
As suggested by financial experts, the best way to stash funds for emergencies is to invest in liquid Mutual Funds/short term funds. These can be liquidated any time and it takes not more than 1 to 2 business days to redeem these funds. So, the best way to create an emergency fund would be to invest in any Debt based Mutual Fund Scheme. You can invest a lump sum amount or start a SIP with budwisefunds where you can deposit a small amount every month. This is called the Systematic Investment Plan or SIP which offers convenience of investing only a small amount regularly without burdening your monthly budgets.
The best part is that your money actually grows in there. In a savings bank account, the interest rate is not more than 4 percent annually where as these liquid funds offer a return of 6-7 percent that is nearly double of what you would get from your savings account. So, instead of your money just sitting in a Bank is actually working for you in the market becoming your partner in earning some extra cash. How amazing is that!
This is a smart route for investing money as these investments are made in fixed income instruments such as government securities, corporate bonds, treasury bills etc. having maturities of less than 91 days. The investments are made in diverse portfolios and the returns are predictable and optimum. These are safer instruments and returns are almost fixed despite any movement in the market. You can invest very low amounts depending on your budget and gradually increase your funds.
It is important that your emergency Fund is managed by a sound financial expert who knows which liquid funds have a great history of performance. All funds have various parameters that need to be analyzed to ensure that you are getting the financial results that you expected from your investment. Here, the professional expertise of your financial advisor plays a strategic and crucial role. Not only should the expert consider the qualitative and quantitative parameters of funds, he must also take into consideration your financial goals and avidity for risks.
Budwisefunds provides various options in liquid funds category and you can invest in best schemes based on our algorithm based robo advisory. Handpicking the top performing Funds, Budwisefunds analyzes the securities thoroughly based on several parameters and only after a meticulous study, the best fund is offered to our investors.
Mutual Funds can indeed be your friend in need.
Trust Budwisefunds to give you a hassle free investment service and india’s best mutual fund investment platform, so that your emergency fund is all set to sail you out from troubled waters, if they arise.