Mutual Fund Application Forms Download Any Applications
Invest in Tax Saving Mutual Funds Invest Online
Infrastructure Bond Application Forms Download Applications

Thursday 27 February 2014

Building an Emergency Fund

Download Tax Saving Mutual Fund Application Forms

Invest In Tax Saving Mutual Funds Online

Buy Gold Mutual Funds

Leave a missed Call on

94 8300 8300

 

 

A contingency corpus is your defence against unforeseen circumstances. Here are the points to keep in mind while setting up one for yourself

 



Do you really need an emergency fund?
The importance of setting up such a fund cannot be exaggerated. Everybody should have one, though some don’t need to put away the requisite amount if they have enough assets. It is often argued that you don’t need emergency cash if you have a credit card. A credit card does come in handy when you face a financial crisis, but the cushion that plastic money provides lasts only 15-30 days, till the bill arrives

How big should the corpus be?
Your emergency fund should be large enough to take care of your living and other essential expenses, such as house rent, school fees, health care and insurance, for 3-4 months. A corpus smaller than this defeats the purpose of setting it up. On the other hand, don’t allocate too much money to it either. Some financial planners err on the side of caution and recommend putting away 8-9 months’ expenses for contingencies. However, this can lead to a lost opportunity because you are locking away a large sum in low-yield avenues.

Where should you invest the money?
There was a time when gold was seen as the safest investment for tiding over bad times, but parking emergency funds in it is no longer a prudent decision. Gold gave negative returns last year and 2014 may not be any different. While paper gold is trading at a premium, physical gold will incur high making charges. Instead, the emergency fund should be stashed in a liquid option, such as a sweep-in bank account or an ultra short-term debt fund. The money in a sweep-in account is immediately available, while the redemption proceeds of debt funds reach you bank account within one working day.

Should you consider equitybased options?
Investors are unlikely to find the 6-7% offered by sweep-in bank accounts and short-term debt funds too attractive. After all, the stock markets are upbeat and analysts believe a bull run is around the corner. Why not invest the emer gency fund in a good equity-based option for better returns? Recall the situation in 2008, when stock prices fell off the cliff and jobs disappeared almost at the same time. Imagine having to redeem your investments to tide over an emergency when the stock markets are in the red.

How to save for the contingency fund?
Don’t try to build the corpus too quickly. It will be a burden on your cash flow and derail other plans, such as saving for retirement or child’s education. If you haven’t already established an emergency fund, start putting away 10-15% of your monthly income for this purpose. This will help you build a corpus in about two years. Any windfall gain, such as a tax refund or an annual bonus, should also be diverted to it. However, it is important that this amount be treated as sacrosanct. Under no circumstances should you dip into it for discretionary expenses.

 

 

 

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

 

 

Leave a missed Call on 94 8300 8300

 

Leave your comment with mail ID and we will answer them

OR

You can write back to us at

PrajnaCapital [at] Gmail [dot] Com

 

---------------------------------------------

Invest Mutual Funds Online

Invest Any Mutual Fund Online

 

Download Mutual Fund Application Forms from all AMCs

Download Mutual Any Fund Application Forms

---------------------------------------------

 

Best Performing Mutual Funds

    1. Largecap Funds             Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Franklin India Bluechip
      4. ICICI Prudential Top 100 Fund

B. Large and Midcap Funds         Invest Online

      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
      4. Birla Sun Life Front Line Equity Fund
      5. Franklin India Prima

C. Mid and SmallCap Funds          Invest Online

      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
      5. Birla Sun Life Dividend Yield Plus
      6. SBI Emerging Businesses Fund
      7. HDFC Mid-Cap Opportunities Fund
      8. ICICI Prudential Discovery Fund

D. Small and MicroCap Funds   Invest Online

      1. DSP BlackRock MicroCap Fund

2.       Franklin India Smaller Companies

E. Sector Funds          Invest Online

      1. Reliance Banking Fund
      2. Reliance Banking Fund
      3. ICICI Prudential Banking and Financial Services Fund

F. Tax Saver Mutual Funds      Invest Online

1. ICICI Prudential Tax Plan

2. HDFC Taxsaver

      1. DSP BlackRock Tax Saver Fund
      2. Reliance Tax Saver (ELSS) Fund

G. Gold Mutual Funds        Invest Online

      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund
      4. Birla Sun Life Gold

H. International funds         Invest Online

1. Birla Sun Life International Equity Plan A

2. DSP BlackRock US Flexible Equity

3. FT India Feeder Franklin US Opportunities

4. ICICI Prudential US Bluechip Equity

5. Motilal Oswal MOSt Shares NASDAQ-100 ETF

No comments:

Post a Comment

Mutual Fund Application Forms Download Any Applications
Invest in Tax Saving Mutual Funds Invest Online
Infrastructure Bond Application Forms Download Applications

Popular Posts