Six months of expenses in liquid form is the foundation every plan stands on. Build it first, then invest aggressively.
Every sound financial plan starts with an unglamorous asset: a reserve of six months' expenses kept safe and instantly reachable. It earns modest returns and wins no dinner-table bragging rights. It also quietly protects everything else you build.
What it is for
A medical event, a family emergency, an unexpected transition. Without a reserve, these force you to break long-term investments, often at the worst possible market moment, converting a temporary crisis into permanent portfolio damage. With a reserve, your SIPs keep running straight through the storm.
Where to keep it
Split it between a sweep-in bank deposit for instant access and a liquid or overnight mutual fund for slightly better returns with next-day availability. Do not chase yield here; this money's only job is to exist when needed. For serving personnel with stable income, six months is usually right; post-retirement or with dependants, we often size it larger.
Build it first, automate it like a SIP if needed, and only then turn the growth engines on. Foundations are boring. So are aircraft inspections. Both are non-negotiable.
Questions about your own plan?
A short conversation with a veteran-led team costs nothing and usually clarifies a lot.