Definition
Emergency Fund
Cash reserved specifically to cover unplanned expenses or income loss, sized independently of your investments so it is never at risk of market timing.
An emergency fund is money held in an accessible, low-risk account, not invested, sized to cover several months of essential expenses. Its purpose is to absorb shocks such as job loss, medical bills, or urgent repairs without forcing you to sell investments at a bad time or take on high-interest debt.
Why it matters: a common driver of long-term financial fragility is having to liquidate assets in a downturn because there was no buffer. Building this fund is usually the first priority before any other financial optimisation.
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