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08/08/2014

The Emergency Fund

 

It is recommended that a sufficient amount of liquid assets be maintained at all time to handle emergencies so that there is not an immediate need to borrow money or liquidate investments at an inopportune time.

So how much should you have?

A good rule of thumb is that the client should have the equivalent of three to six months of fixed and variable expenses in liquid accounts for emergencies. Disability is one of those emergencies and disability insurance policies come with a waiting period before benefits kick in. Make sure your emergency fund is adequate enough to cover this period of time as well if it differs from the three to six month rule of thumb.

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