How Much Emergency Funds Should You Have ? A Step By Step Process To Build It
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- Опубліковано 1 вер 2022
- #nri #nrimoneyclinic #financialplanning
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I will keep my emergency funds as FD in bank. Per bank only 5 lakhs only.
We have to keep in FD in public sector bank but interest is less.The best is RBI bond but lock in period is too long for senior citizen like us
Thank you for a nice video sir. This topic is more relevant to the current times where majority can buy anything with a single click of a button without thinking much about their future. I believe we should park emergency funds in good quality liquid funds were money is accessible quickly (under a week as you mentioned)
1.Fixed desposit without Lockin .2.Cash in savings bank 3.Gold/Siver
Excellent presentation, very informative
Very simple and nice presentation sir !!
Few basic things I respectfully don’t agree with
1) Funds for vacation- when there is loss of income, one needs to keep this aside
2) SIP- One needs to pause this
3) House renovation - can be avoided
4) 2 years is an overkill- 6-12 months is best for most.
I agree that they key characteristics of an emergency fund is liquidity and non volatile. With this in mind- return has to be the last thing on one’s mind
Few areas of investment/park emergency funds
1) Bank FD nationalized or large private banks
2) National bonds - UAE
3) Savings account
4) Liquid funds (over night)
Having a credit card handy, to use immediately also is a good plan to have. Not using it, as a medium to raise debt. But just to use as an emergency and pay the bill before due date.
Yes ebentually, I will do two years. I'm still working on one uear.
Sir thanks for the video.
How about VPF for emergency fund. Please share your advice. Thanks
Very good information
Sir, I have a doubt, whether the invested emergency funds, should be periodically conducted valuation for getting in line with inflation(The point is not concentrating on return that beats inflation but maintain the capital/real/actual value of the money).
The reason behind this question is that the time value of money keeps on eroding in its way, and if an investor says (for illustration purpose), plans 12 Lakhs as emergency funds and is on the process of building it, the 12 Lakhs during the course of building, will no longer be the value of 12 lakhs.
This was a long running question in our minds sir. Please guide us sir.
Debt mutual funds, gold or FD of short duration.
Liquid fund,short term debt fund will be the best especially if you are a taxpayer!
It seems to me toomuch to park for Emergency fund ... 2 years of everything does not seem to be an ideal way ... Why the investment also to continue in case of no job
Also most of the people say 6 months is good but 2 years make it humongous and no one would save so much as there are very little avenues to invest beyond 10 lakhs on hand
There are plenty of avenues to park
Co-operative and Small Finance Banks have 5 lakhs insurance for our money like big banks. Co-operative societies is unsecured.
Liquid & Overnight mutual funds
No for FD in Co-op banks
In Liquid mutual funds
In Debt mutual funds
Hi Sir.. Great video overall.... but with all due respect, i think the numbers you gave in this example are impractical. For an average person with 50k monthly expenses and 25K home loan EMI, the salary will be around 1-1.25Lakhs. The final emergency fund number you have arrived at is 35Lakh rupees, which is approximately 2.5-3years if his/her income (Oveall income). Even if we assume 50% savings rate, it will take 5-6 years for them to pool this much amount of money.. and since we don't live in ideal world, it should take more than that, say 8 years. Imagine the income and expenses growth that happens in these 8 years and suddenly their 35Lakh goal will become 50lakhs or so... people will never be able to catch up this way, they will loose motivation and finally give up. In my personal opinion, 3-6 months of bare min. expenses + EMIs should be more than enough. They must differ all non emergency related one time expenses, especially things like holidays etc.. Remember they are trying to survive a period of job loss but not retired. If we are talking about the temporary break one wants to take for 2 years, then I would agree with these numbers.. but that's not an emergency.. it has to be planned.
Bonds+gold bars
FD In a co-op bank, NO
Liquid fund. Overnight fund. FD are not liquid.
Mr. Chandrakant I think you have changed the definition of an emergency. Is it emergency to go for a vacation, is it emergency to house renovate, is it emergency to save for friends and relatives emergency, is it emergency to pay SIP, is it emergency to fulfill all unnecessary commitment. Anyway if one wants to save two years of all such nonsense expenses then he or she might save for at least 20 years to achieve that much, because you cant ignore other present goals. I think this is too much and its theory.
You can think what you want to . You are free to do so . Emergency Funds is not contingency fund . It is a pool of fund to run your life in a normal way irrespective of what happens in your life. Give it a name you like .. watch the full video to absorb the rationale
@@NRIMoneyClinic
Mr. Chandrakant I have seen the video in full and after that i commented. You may not like it. You have not tell the steps how to build it. Can you please tell us with a real life example of a person earning a lakh per month and he has to spend 60 K as monthly expense and he can save 40 K per month. Now please make a plan for emergency fund as you described with other goals and how many years it should take. Is it really feasible. I have given you very good condition. People in general may not have that much income and savings. I don't need in detail. You just tell us how many years it should take. You have described the video as step by step. Where are the steps.
Building emergency fund is not a one time process.. it is a continuous process . There is video on this channel by name " a proven method of financial planning " please watch and be guided .
Please note : I am a practitioner and not a run of the mill you tuber who does not practise in real life. Every word spoken on this channel is derived from practical experience of working with thousands of families scattered across globe. You are at liberty to pursue your beliefs
@@NRIMoneyClinic Now I will make your calculations more simpler. From the 40 k savings. Please consider 20 K for retirement, 10k for house down payment, 5k for children education, 3 K for car purchase and 2k for emergency savings. Consider A value as 60 K per month means 14.4 lakhs B value as 5 lakh total for 2 years and c value is 2 lakhs. Total 21.4 lakhs. Now tell me how many years it should take. Don't consider I will change my lifestyle. Though you told to consider that.
@@NRIMoneyClinic yes rightly said its a continuous process and no one can build emergency fund right away. Considering savings of 2000 per month to accumulate 21.4 lakhs it will take 35 years in a recurring deposit @5% interest. In between if we have to cater some emergency like to help family friends then in a lifetime may not possible. Your expert guidance is required on that. Even if I save all the 40k still it will take 4.5 years to accumulate that. But people will be short of other goals. Anyway I understand your concept.
This is life investment.... not really emergency fund
Fixed Deposits
Invest in gold
To NRI Peoplem just for your information if you are parking emergency funds on any liquid mutual funds then make sure your account is NRO not NRE.
Please explain why.
@@wxyz885 NRE account can recieve money only from overseas thats why NRO account helps because it works just like normal saving account and about mutual funds when you redeem any , your redemption amount will be transfered to NRO account. I faced same issue already!
Sir, myself has worked out something based on your advise in an excel sheet, which i wish to share with your good self. If possible please share email id so that I shall share the excel sheet. The intention is behind this is that, when we sit on and get into action for building emergency funds, so many questions comes in our minds sir.
This is life investment.... not really emergency fund