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A reader asks,
I have an emergency fund that doubles up as a buffer for unforeseen expenses and for the pink slip. I currently have three-months’ worth of expenses in this fund which is lying as a cash balance in my savings account. How can I structure this fund in order to earn a better return?
What do you think of this strategy?
- Retain 1/4 of the fund as a cash balance in the savings account.
- Move 3/4 of the fund into a pure-debt fund.
I did some research and found HDFC’s Cash Management Plan Savings Plan (Growth) (no entry load, no exit load, high liquidity) to be a good choice for #2.
What do you think?
Thanks for reading this article. I'd love to hear your opinion. Please use the comments section below to share your thoughts. I frequently write new articles that also cover several other aspects of personal finance including credit cards, financial goals, health insurance, income tax, life insurance, mutual funds, retirement planning, and much more. You can Subscribe through Email and receive new articles directly in your Inbox or you can Subscribe through the RSS Feed and receive new articles in your feed reader.