I see that many of you actually liked the concept of 20 % method wherein you allot 20% of your earnings to be saved as emergency fund.
So I was thinking, if that 20% allotted will be invested in a time deposit kind of account, will it still be possible to earn as much or invest it in cryptocurrency? Or maybe just let the money sleep until such time you will need it?
What will be a wise kove to do with the noney you have saved up?
Emergency funds are not to be deposited in a time deposit account. Time deposit accounts have specific time before you can withdraw it and you can never tell when you are in need of it. Also it is not wise to invest emergency funds because you are doing away with the main purpose of such savings.
You can still withdraw from a time deposit account if you need the money, the only reason not to would be you forfeit interest owed to you for withdrawing early. Putting the money in a liquid account for ease of access and that pays some sort of interest or provides a return, like a time deposit account (CD) or simply a savings account, is far preferable to holding cash. The reason is cash depreciates over time, pretty slowly in most cases, but it loses value nonetheless. In a time deposit account or savings account, the interest earned reduces the loss of value due to inflation, if it doesn't entirely make up for it. And in the case of the time deposit account where you have to withdraw early and forfeit the interest, you're no worse off than if you held cash for that time and have the potential to be better off if you don't need to withdraw it early, which holding cash provides no upside. So logically, there's only potential benefit to a time deposit account and only potential detriment to holding cash.