Don't start long term investment without an emergency fund

[anupkuumar5]

Before you start your long-term investment journey, set up an emergency fund with at least 6 months of your salary. This step is essential to protect your investments from being disrupted by unexpected situations. Parking this fund in a liquid investment can not only provide quick access when needed but also generate returns. For instance, a ₹3 lakh corpus can yield around ₹15,000 annually—enough to cover your health and term insurance premiums. Build this safety net first; it’s the foundation of financial stability.

 

[arjungoyal12]

I have around 2-3 lakhs in mutual funds. I don't intend to withdraw. But there isn't any emergency fund. I want to know what might be the best options to start an emergency fund. I don't have a health insurance either.

 

[anupkuumar5]

If you have an ongoing SIP, I suggest you to pause it for sometime and use that fund to deposit in liquid fund. Doing this till you have a comfortable emergency fund will be a good idea without disturbing the existing investment in the mutual funds.

 

[arjungoyal12]

Can you suggest me some Liquid funds? I don't know if there will be charges when I pause my ongoing SIP

 

[anupkuumar5]

There is no penalty on pausing of mutual funds.
You can invest in SBI, HDFC or ABSL liquid fund. All have almost same returns.
Make sure you invest in liquid funds using Mycams or the fund website and not use it in DEMAT form. The advantage of doing this is that you can withdraw upto 90% of the liquid fund or 50000 rupees (whichever is less) within few minutes in your account. This can be done through the mutual fund website.