What is an Emergency Fund?
An emergency fund is a separate saving or bank account used to cover or offset the expense of an unforeseen situation, such as:
- Unforeseen medical expenses.
- Home-appliance repair or replacement.
- Major car fixes.
- Unemployment.
How much should you save?
Your emergency fund should cover at least 3 to 6 months’ worth of expenses. To determine this amount, add up how much you spend in a single month on things that you can’t go without (e.g. food), and the contributions you owe each month (e.g. monthly savings or a mortgage).
Where can you park your emergency fund?
Fixed Deposit Savings Account
Fixed Deposits or FDs earn higher profit rates than a typical savings account. However, should you withdraw before the FD matures, you will lose the profit but at least your initial investment remains
Money Market Fund
MMF is easily liquidated, you may redeem all or part of your units on any business day and the unit trust manager will purchase them. This means that should you need cash, you can easily sell the investment.
Flexi House Loan Linked Current Account
You can reduce the principal amount owed when you deposit extra money into this account. You can use this account to reduce the interest/profit rate on your loan/financing and withdraw it anytime in an emergency.
Low-Risk Investment Accounts.
If you do want to invest your money, consider investments that are low-risk and easy to withdraw/top-up, such as Amanah Saham Nasional Berhad or bond funds offered by banks or unit trust companie