GLOSSARY TERM
Emergency Fund
An emergency fund is money kept aside for unexpected expenses or difficult situations, such as losing your job, a large repair bill or a sudden medical cost.
What does this mean in practice?
This money is usually kept in cash or in an easily accessible savings account, not in long-term investments. The goal is safety and quick access, not high returns. An emergency fund helps you handle surprises without needing to borrow money or sell investments at a bad time.
Example
If your car breaks down, your washing machine stops working or your income suddenly drops, you can use your emergency fund to cover the cost. This gives you time to deal with the situation without disrupting your long-term investment plan.
Why it matters
An emergency fund protects your investments from short-term life problems. It makes it easier to stay invested and avoid selling during market declines just because you need cash quickly.
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