Building an Emergency Fund With Liquid Mutual Funds

Before you invest for growth, build a safety net. An emergency fund covers unexpected shocks — job loss, medical bills — without forcing you to sell long-term investments at a bad time.

How much? 3–6 months of essential expenses. If your income is irregular, lean toward 6–12 months.

Where to keep it Not in a low-interest savings account, and definitely not in equity. Liquid or overnight funds are ideal: - Low risk, stable value. - Better returns than a savings account. - Quick access — redemptions usually hit your account in 1 business day (some offer instant redemption up to a limit).

Rules for an emergency fund - Keep it separate from investing money — don't dip into it for a vacation. - Replenish it after any use. - Only after it's funded should you start aggressive equity SIPs.

Browse stable options in Lowest-risk funds.