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Saturday, August 31, 2013

Now Is the Best Time to Use Your Emergency Funds

Most investment professionals would advice potential clients and investors to first set aside at least six months' worth of living expenses as an emergency fund before staking their hard-earned money to the uncertainties from investing. In every investment there is accompanied risk, and the emergency fund allow for us investors to still sleep soundly at night even if all our investments are not performing as planned.

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Emergency fund really helps because it gives us some breathing room in case there are unfortunate circumstances that may come upon us. Even if we lose our major source of income, knowing we have set aside some money which we can readily pull off helps us to get back on track without significantly changing our way of living.

Personally, emergency fund can also be used to grab good investing opportunities. The recent market decline despite the good GDP growth clearly is a good opportunity to maximize profits or mitigate some losses. I am confident that the Philippine Index will eventually bounce back from this massive decline. If you do not foresee any immediate need to use your emergency fund, now may be the best time to use some of it. I still recommend though to still leave at least two months of your living expenses and slowly build your emergency fund again to your desired amount.

It is very important to rebuild your emergency fund so you will still be secure.

The market is currently priced at late 2012 to early 2013 levels. If are still afraid to invest right because of the volatility, you may think of it this way: It's like you were given a chance to invest in the stocks market at late 2012, which is where the current price is. It's  a 2012 market, but with 2013 earnings not yet priced in. Isn't that the best way to start your investing success?


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