How to Use FD to Meet Your Emergency Expenses?

Why do You Need an Emergency Fund?

You need an emergency fund to manage unforeseen financial distress situations like a layoff or unexpected high medical expenses.

What is FD Laddering?

FD laddering is a diversifying strategy to invest in FDs with varying maturities instead of investing in a single one to enhance liquidity & maximise income generation.

How to Prepare for Emergencies With FDs (1)

Suppose you have ₹8 lakhs for an FD. Don’t invest all of it in one FD.

How to Prepare for Emergencies With FDs (2)

Instead, divide it into ₹2 lakhs FD for every year, maturing every year from 1 to 4 years.

This way, you’ll be able to access substantial funds for emergencies without taking high-interest loans.

How to Prepare for Emergencies With FDs (3)

Why are FDs a Good Choice for Emergency Funds? (1)

With FDs, your principal amount stays protected from market fluctuations, guaranteeing you quick access to your money.

Why are FDs a Good Choice for Emergency Funds? (2)

Now, FDs by SFBs offer close to 8.5% p.a interest, which is quite competitive compared to FD rates in the past.

Final Thought

Competitive FD Interest rates help you reduce interest rate risk by allocating your money over multiple tenures via FD laddering and saving for emergencies.

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