New Delhi, Sept. 23 -- An emergency fund is meant to protect you when an unexpected expense arises, whether it is a medical bill, job loss or a large unplanned payment. Since this money may be needed at short notice, the priority should be easy access and stability rather than simply chasing the highest possible return.

However, keeping the entire corpus in one place may not always be necessary. Investors can consider different options depending on how quickly they may need the money, said Santosh Agarwal, CEO, Paisabazaar.

"The most important thing is to keep emergency money separate from day-to-day cash and park it in options that are low-risk, stable and highly liquid," said Santosh Agarwal, CEO, Paisabazaar.

A high-yield savings ac...