Emergency fund strategy
A savings account compared with a liquid fund that moves money into equity.
A: Savings account
Return assumed3%/yr
Effective CAGR3.00%/yr
Total return34.4%
Gain₹2,06,350
Value after 10 years₹8,06,350
B: Liquid fund with an STP into equityEnds ahead
Blended CAGR6.75%/yr
Total return92.2%
Liquid fund portion₹8,37,254
Equity portion₹3,15,877
Value after 10 years₹11,53,132
Strategy B ends ahead by
₹3,46,782
after 10 years
Moved to equity
₹18,000
every year
How each is worked out
A = ₹6,00,000 × (1 + 3%)10, compounded and untouched. B = the liquid fund grows each year, then 3% of the original ₹6,00,000 moves into equity, which compounds on its own. Taxes, exit loads and the need to keep part of the fund instantly available are not modelled.