How big should your emergency fund be?
An emergency fund covers job loss, medical bills your insurance does not pay fast enough, and the unexpected ₹50,000 you cannot put on a credit card. The standard rule is 3 to 6 months of essential monthly expenses (rent, groceries, EMIs, insurance premiums, utilities), not your full lifestyle. Park it where you can withdraw it in under 24 hours: a high-interest savings account, a sweep-in FD, or a liquid mutual fund.
If your essential expenses are ₹40,000 a month, target ₹1.6 to ₹2.4 lakh. Splitting it: ₹50,000 in a savings account for instant access, ₹1.5 lakh in a liquid fund (T+1 redemption, ~6% to 7% yield). You do not need it to grow; you need it to be there.
Investing your emergency fund in equity to 'not waste it'. The whole point is being immune to market timing. You will need it on the worst possible day.
A 60-second lesson on this, with a worked drill, lives inside the Finlo app. Free, forever, on the basics.