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 …