Investment & Saving Options for Emergency Fund: Where to Put?

By Grace
Here’s the best saving and investment options for emergency fund. Take advantage of investing your emergency funds while you don’t need them. But, is it good to put emergency funds in the stock market?
The reason why I create a how to invest money series of topics is for you to understand easily the proper way to invest your money. If we review our topic again and again, investing money should always start with knowing the reasons why should you invest, understanding the advantages of having a millionaire’s money mindset and part 3 is a topic related to getting out of debt.

It is true that investing can help you achieve financial freedom. But, it doesn’t end there. You should understand that when investing money, there are things to consider, and that is building emergency funds. Our topic for today as our third part how to invest money series of topics will be “emergency funds”.

So, what is an emergency funds? From the word itself, emergency funds is a source of funds exclusively for emergency cases. Examples of emergencies are roofing repair during rainy days, car maintenance, sickness, accidents, sudden illness, etc.

See Also: Example of Blue Chip Stocks in USA and UK

Emergency funds, health insurance and life insurance should be prepare before investing your hard earned money. But, we have to focus on emergency funds today. Topics for health and life insurance will be publish later on.

Tips in Building Emergency Funds

1. Determine How Much Emergency Funds Should You Need

It is advisable to have emergency funds with a an amount of money equivalent to your 6 months income. Example, if you have $2,500 per month income, your emergency funds should worth $15,000.

Investment & Saving Options for Emergency Fund

Image Credit: Karl Baron via Flickr CC 2.0

2. Emergency Funds Should Easily Get 24/7

Since we don’t know what will happen in today, tonight or even tomorrow, emergency funds should easily withdraw immediately in case of emergencies. You can deposit your emergency funds in the bank.

3. Build Emergency Funds Easily

Every time you receive your monthly salary, it is ideal to set aside at least 10% of your money and put it in your emergency funds. Once you complete the suggested amount (6 months equivalent of monthly income), stop depositing money in the bank.

You don’t want to pull out your investment funds during emergency cases especially if the funds are in losses due to down market, right? That’s why, emergency funds is very important. Besides, redeeming your investment funds will take too much time, but, if you have emergency funds, anytime and anywhere you can get it as long as you need the funds.

Other Useful Tips:

While building your emergency funds, buy health and life insurance. In our next how to invest money series of topics, insurance will be discuss further.

Thank you for spending your time reading this guide about investment options for emergency fund. If you have any questions, please write it in the comment box below. May you have achieve financial freedom, keep investing for your future.

See Also: How to Invest Money for Your Financial Future? (5 Steps)
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