Where should you build an Emergency Fund?
February 17, 2021
What is an Emergency Fund?
An Emergency Fund is a collection of savings that has been put aside for any financial emergencies such as an economic crisis, job loss, political upheaval, overinflation or any kind of financial burdens that may prevent one’s normal revenue from coming in. The goal of Emergency Funds is to act like a piggy bank that can be used during these trying times for one’s necessary expenditures such as groceries, electricity and the expenses of one’s dependents like education for children and more. It is essential to create an emergency corpus when it comes to securing one’s future.
In other words, Emergency Funds are essential aspects of financial planning. During times of crisis, they serve as the financial cushion necessary to keep oneself as well as loved ones afloat. There are many places one can start building an Emergency Fund. For instance, the best Savings Accounts have high-interest rates which allow your savings to earn an interest-based income each year. These Savings Accounts are the standard way to save Emergency Funds. However, there are more ways in which one can park their money. One such way is as follows:
How to build an Emergency Fund?
A Fixed Deposit is one of the options through which one can build a savings corpus that is suited to emergencies. These are non-market linked financial instruments that allow you to systemically save over time. There is no real downside to starting a Fixed Deposit. They are generally a win-win situation to financially secure your family. You get the benefit of savings alongside the growth of your funds from the interest rate applied on your corpus. There are different schemes that offer benefits to this existing structure.
For instance, with ICICI Bank’s Tax Saving Fixed Deposit, you not only get the benefit of tax deduction, but you receive this benefit at highly attractive interest rates. You can invest amounts as small as Rs 10,000 and as per the previous tax laws, particularly Section 80C, you can receive tax benefits up to Rs 1.5 lakh. Your interest pay-out will also be incredibly flexible as per this policy where it will be paid out in monthly, quarterly or half yearly instalments.
Hence, a Fixed Deposit plan offers protection with the guarantee of savings. You have no strain of market linked volatility affecting how much you earn from your Fixed Deposit. The amount will be transparently revealed to you right before you invest, guaranteeing a corpus of savings you can use. Fixed Deposit is an extremely helpful way to incorporate goal-based savings.
Benefits of Fixed Deposit as an emergency corpus:
The ICICI Bank Fixed Deposit can help you fulfil your financial planning with respect to creating an emergency corpus in the following ways:
Helps to amass a corpus for any savings goal, including funds as an emergency corpus.
Offers attractive guaranteed additions in the form of high-interest rates applied to one’s savings corpus.
Senior citizens who choose to save through the ICICI Bank Fixed Deposit receive an extra 0.5% of added interest over and above their guaranteed interest rate from the Fixed Deposit.
Conveniently start your Fixed Deposit within minutes from your smartphone device using the ICICI Bank iMobile Pay app. Minimal documentation and processing time is required for you to start. Use any one of your pre-existing ICICI Bank Accounts.
You have the benefit of auto renewing your Fixed Deposit with ICICI Bank Accounts. You can easily set up the auto-renewal mode when you are opening your Fixed Deposit. This allows your FD to be renewed each month for both the same maturity date and tenure without manually having to do so. No interest is lost as a result of setting up auto-renewal.
Tax benefits of your Fixed Deposit can be availed when filing for income tax deductions. As per Section 80C, one is eligible for tax deductions for premiums paid towards their Fixed Deposits up to a limit of Rs 1.5 lakh paid as premiums annually. Additionally, Section 10 10(D) states that maturity pay-outs can be tax-exempt if the annual premiums do not exceed 10% of the sum assured.