In a few blog posts and comments, I have mentioned how I like to park emergency funds and a portion of my war chest in fixed deposits.

Fixed deposits offer higher interest rates than savings accounts and are liquid enough to be considered near money.

I have been asked before how I go about doing it and although I am pretty sure I have mentioned it before in my blog, I am not sure if I have done it clearly. Anyway, I guess I shall try to do a better job in this blog post.

EMERGENCY FUNDS

For emergency funds, first, we have to determine how much we need to have in order to maintain the lifestyle we¬†currently have¬†in the event that our income stream disappears. Then, set aside this money. (For my thoughts on how to determine how much we should put aside, please see related post no. 1 at the …