Do you have an emergency fund? If not, you should. An emergency fund is a pool of money that you can use to cover unexpected expenses, such as a job loss, medical emergency, etc.

Now that we know that one should have emergency fund, spreading this fund across multiple avenues is more sustainable way to manage a financial crisis.

You might ask, why? Well, diversifying these funds across stable, dynamic, low-risk, high-risk investments vehicle will give you easy liquidity at the time of need.

So, how should start building an emergency fund? - Invest in Liquid Funds

Well, one way to create an emergency fund is to invest in liquid funds. Liquid funds are a type of mutual fund that invests in short-term debt securities, such as treasury bills and commercial paper. This makes them very liquid, that means you can easily access your money when you need it.

One important thing to remember is that some of these instruments mature within a timeframe of 91 days only. These are also low-risk investments, which means that your money is not likely to lose value in the short term.

Here are some additional tips for investing in liquid funds for your emergency fund:

1. Choose a fund with a low expense ratio.

2. Consider a fund that offers daily liquidity, so you can access your money quickly if you need it.

3. Rebalance your fund periodically to ensure that it still meets your investment goals.

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