No matter how
careful and strategic we are with planning our life and our future, life has a
way of throwing the most unexpected encounters at us. That’s why financial
experts suggest you keep some liquid savings stashed up for such rainy days.
WHAT ARE THEY?
So what is a
rainy day fund?
They are the
help that you need during a financial thunderstorm.
Having a rainy
day fund will surely give you some peace of mind, and can help reduce your
money related stress. You can relax, because you know that if an emergency does
arise, you have got it covered.
ultimate question. What is the best way to have a rainy day fund?
It is advised
that your rainy day fund must be in a secure, liquid vehicle such as a savings
account or money market fund. Ensure that the fund does not have an ATM card
coupled with it. That is, it shouldn’t be easy to access on a daily basis –
which makes sense, considering its purpose.
are the less known, and most versatile form to store your rainy day funds in.
Yes, although a
life insurance is not a fund per se, it does perform the function of a ‘crisis
fund’ when the worst happens.
So what makes a
life insurance a better option than an emergency savings account?
The advantage is
that if you do need it, an insurance will pay out to you a larger sum than you
paid into it – making it a tremendously better solution than a simple emergency
savings fund or you shall avail a loan over your life insurance policy at a considerably low interest rate.
different kinds of insurances that offer life cover or a term insurance.
Depending on your lifestyle and risks you need to compare and choose the plans
that are best suited for your need. There are several web aggregators online
that help you compare, choose and buy the right insurance online, and take the
help of these, whenever you need them.
the right policy for you will involve taking all your other circumstances into
account. Yes, the decision might require skill and knowledge beyond your
means, which is why it is recommended that you seek the help of a professional
And thus, when
it comes to rainy day funds, ordinary savings might give you just protection.
But an insurance goes several steps further by bestowing several added benefits
and a life cover!
POSTED BY: BALAKARTHIGA.M