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?
In my opinion, Emergency Funds do not have to be deposited in a time deposit account. A time deposit account has a special time before you can withdraw it and you never know when you need it. It is also unwise to invest an emergency fund because you are doing away with the primary purpose of the savings.
You should keep it in the bank for emergency needs.
Time deposit accounts don't prevent you from withdrawing you funds, they just penalize you for doing so early by forfeiting the interest you would have earned over a certain period of time. If you have a 24 month CD and withdraw early, the penalty may be 6 months interest. Because a CD likely offers high interest rates than a normal savings account, you're probably better off with the time deposit account even if you withdraw early because you're likely to make more interest in 18 months of a CD than 24 months of a savings account. And the likelihood of having to withdraw early is probably low, so there's far more upside than downside to choosing a time deposit account.