top of page

Emergency Funds with Sweep in Facility

When a disaster comes, a house made of basic bricks is entirely ripped apart. One can only be safe in a house with a solid foundation and cement walls. An emergency fund is all about creating a solid foundation and sturdy walls to protect your finances in the event of a financial disaster.

People's wallets have been ripped open by inflation, from tiny businesses to large corporations. More than a dozen companies have announced layoffs in recent weeks. For this reason, it's a good idea to have a well-stocked emergency fund in case you become the next victim of the financial crisis.

Ideally, a emergency fund should be risk-free and easy to access. Debt funds have both of these qualities. Sweep-in Fixed Deposits are one of the many alternatives available to investors looking to invest in debt instruments, but today we'll focus on one particular type of investment (FDs).

Sweep-in FDs:

Sweep-in FDs, as the name suggests, are a type of savings account where you deposit any unused cash. To illustrate my point, I'll use an example. Let's say you need a minimum of Rs. 40,000 in your bank account to cover discretionary spending, and you receive an additional Rs. 10,000 in credit from someone else. You will now have a balance of Rs. 50,000 in your account. Sweep-in FD is a feature that allows you to automatically deposit the surplus cash, in this case Rs.10,000, into your FD account.

These products offer a penalty-free, anytime withdrawal option. You don't have to take out a loan from your FD to meet your short-term financial needs. Your interest will not be affected if you borrow money at any time. As a result, these funds are ideal for covering short-term emergencies.

This facility, on the other hand, is not open to everyone. In order to use the service, investors must have a minimum of Rs. 25,000 invested or have a balance of Rs. 25,000 to Rs. 1,00,000 in their Fixed Deposits.

bottom of page