Rashid's monthly expenses are $4000 and he expects that his cash flow will always be sufficient to cover his expenses.How much should he ideally have in his emergency fund?

Question

Quizplus · Accepted Answer

It is recommended to have an emergency fund that can cover 3-6 months' worth of expenses. As Rashid's monthly expenses are $4000, his emergency fund should ideally be $12 000. The best approach would be to have a combination of liquid investments and access to credit to ensure that he can access the funds quickly in case of an emergency. Investing in GICs may earn a higher return, but the funds may not be easily accessible in case of an emergency. Therefore, option A is the best choice.

Rashid's Monthly Expenses Are $4000 and He Expects That His