Honestly, on the conservative side, one should have at least 12 months worth of living expenses as emergency savings and you cannot just create this once and forget about it. As your lifestyle expenses increase, you need to increase your emergency fund as well. And these funds will be actually used for unpredictable or unforeseen events. Now, where to keep it? So don’t chase behind returns for something like emergency funds. You can keep some part of it in liquid funds and other part in fixed deposits in a separate bank account. There is no point in keeping it in a savings account.