To ensure your savings are secure and will be readily available when you need it, seek facilities that are:
- Safe from market risk. You’ll know your money is there when you need it most.
- Easy to access. All to ensure you can withdraw the money easily and effortlessly.
- Income-earning. Although the reason behind an emergency fund isn’t about making money, don’t deny yourself the opportunity to earn some profit on your savings.
There are two popular places to park your emergency fund:
- An unfixed deposit account or a high-yield savings account
An unfixed deposit account is a fixed deposit with the flexibility to make multiple withdrawals from your fixed deposit account before the maturity date while your balance continues to earn profit at high rates.
To find the right high-yield savings account for your emergency fund, look for options with a competitive earnings rate and no monthly fees or minimum balance requirements. Make it easier by setting up a monthly automatic transfer to save you from the sudden spending urges.
- Fixed deposit accounts
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.
If your emergency fund is already sorted, you’re well ahead of the pack. If not, it’s never too late to start. Ask your financial advisory for help in finding the ideal account to store your funds. Learning more helps you prepare for those unexpected rainy spells.
This article is brought to you by CIMB as part of our ongoing efforts to raise the level of financial literacy among Malaysians. Financial knowledge and understanding are key to making well-informed and meaningful financial decisions that will improve all our well-being. This, in turn, achieves CIMB’s purpose of advancing customers and society.