NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Introduction to Personal Financial Planning
Ms. Rao's monthly take-home income is ₹80,000 and her essential monthly expenses are ₹45,000, including EMIs. Using a rule of thumb of 6 months of essential expenses for an emergency fund, how much should she hold in liquid assets?
She should hold ₹2,70,000, which is six months of essential expenses of ₹45,000. The emergency fund is sized on essential outgoings including EMIs, not on income, so using ₹80,000 would overstate the requirement.
- A₹2,70,000Correct
- B₹4,80,000
- C₹2,10,000
- D₹3,60,000
Explanation
The emergency fund is based on essential expenses: 6 × ₹45,000 = ₹2,70,000. Using income gives ₹4,80,000, which is the wrong base. ₹3,60,000 is 4.5 months of expenses, and ₹2,10,000 is not derived from the data.
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