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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Case Studies in Comprehensive Financial Advice

Meera, aged 35, earns Rs 1,00,000 per month and has monthly EMIs of Rs 20,000 and a monthly rent of Rs 25,000. Her monthly household expenses are Rs 30,000. She has no emergency fund. Her adviser recommends an emergency fund equal to 6 months of essential outflows, treating rent, EMIs and household expenses as essential. What emergency fund target should the adviser set?

The emergency fund target is Rs 4,50,000. Essential monthly outflows are rent Rs 25,000, EMIs Rs 20,000 and household expenses Rs 30,000, totalling Rs 75,000. Multiplying by six months gives Rs 4,50,000, based on essential outflows rather than total income.

  1. ARs 4,50,000Correct
  2. BRs 1,80,000
  3. CRs 6,00,000
  4. DRs 3,00,000

Explanation

Essential monthly outflows = 25,000 (rent) + 20,000 (EMIs) + 30,000 (household) = Rs 75,000. Six months gives 75,000 x 6 = Rs 4,50,000. Rs 1,80,000 counts only the EMIs and expenses of 50,000 x... actually omits rent and is wrong; Rs 6,00,000 wrongly uses the full income instead of essential outflows.

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