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Market Intelligence › Basic Terminologies
Why investing is weak without emergency fund and insurance
Published by The Retail Trader · AUG 06, 2026 · Retirement & Insurance
Before starting to invest, two things should be in place – an emergency fund of a few months and necessary insurance. This sounds boring, but it's the only thing that keeps the rest of the plan from falling apart.
The benefits of investment come with time. If an emergency forces you to sell at the wrong time, the entire compounding process breaks down.
The purpose of insurance is the same — to prevent a big, sudden expense from reaching your long term corpus.
A practical framework is this:
• Emergency fund equal to a few months' expenses, and that too in liquid form.
• Health cover according to the size of the family and hospital costs of the city.
• Term cover lasts as long as someone depends on you financially.
• It is enough to set these three once and review them once a year.
Low returns of emergency fund is not its weakness, it is its design. His desire is not to grow — his desire is to exist in the day when selling everything else would be the worst decision.
This article is for educational purposes only. It is not a buy or sell recommendation, a claim of guaranteed returns, or advisory guidance. Exchanges, SEBI and RBI change rules, rates and procedures from time to time, so verify every figure with your broker or an official source.