The coronavirus-induced disruptions have made us realise the importance of building a robust emergency fund. An emergency fund is an essential corpus that one must keep aside to meet unanticipated financial shortfalls that may arise.
The Money9 Helpline hosted Kalpesh Ashar founder, Full Circle Financial Planners, to help our callers navigate through financial distress.
Ashar: I suggest you review your existing investments be it stocks and mutual funds. Also, assess your insurance portfolio. Insurance is most important in the chronology of financial planning. But sometimes we have unwanted policies in our portfolio, that might not give us enough coverage. You must seek the advice from an expert on your insurance and investment portfolio. This will help you in liquidating any unwanted clutter in your portfolio. From there you can generate a corpus of 6 to 12 months. You can divert some amount to smart FDs which can be easily be converted into contingency funds.
Ashar: I would agree that you must review the mutual fund. There are certain funds that might have not performed well for some time. You can book your profit from there for your contingency fund. You should not tend to be lured by greed. So try to divert your assets into secure assets. You can also keep it in savings. Short-term FDs and savings have almost the same interest rates. Savings are more accessible.
Ashar: It is a very unique approach. It all about discipline, both are diverse mindsets.
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