Maintaining an emergency fund before redeeming mutual funds is important because it ensures you have quick access to cash during unexpected expenses without disturbing your long-term investments. This helps avoid selling mutual fund units at a loss or during market downturns.
What is an Emergency Fund?
An emergency fund is money saved separately to cover sudden expenses like medical bills, job loss, or urgent repairs. It is usually kept in a safe, liquid form so you can access it quickly without penalties or delays.
Why Should You Maintain an Emergency Fund Before Redeeming Mutual Funds?
Having an emergency fund prevents you from rushing to redeem mutual funds in bad market conditions, which can cause losses. It keeps your investments intact for long-term growth while providing financial security during urgent needs.
How Much Should You Keep in an Emergency Fund?
Financial experts suggest keeping at least 6 to 12 months of living expenses in your emergency fund. This amount gives you enough buffer to handle unexpected costs without stress.
Where Should You Keep Your Emergency Fund?
Keep your emergency fund in safe and liquid instruments like savings accounts, fixed deposits, or liquid mutual funds. This ensures easy and quick access without penalties.
What Happens if You Don’t Have an Emergency Fund?
Without an emergency fund, you may be forced to redeem mutual funds prematurely during market lows, causing losses. You might also rely on high-interest loans, increasing financial stress.
How Does Angel One Help You Maintain Financial Discipline?
Angel One provides easy-to-use tools and advisory to help you plan your emergency fund and manage investments wisely. Their platform encourages disciplined investing without disrupting long-term goals.
Contact Angel One Support at 7748000080 or 7771000860 for mutual fund investments, demat account opening, or trading queries.
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