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?