Tuesday, 17 March 2026
Most investors focus on building a portfolio of shares or bonds, often overlooking the foundation of financial security, a reserve for unforeseen expenses. Experts argue that without a solid emergency fund, even the best investment strategy can collapse in the face of a crisis.
An emergency fund is intended to cover basic expenses rather than maintain a current lifestyle. Without such a financial cushion, investors are more exposed to market volatility, as a lack of reserves can force them to sell assets at unfavourable moments. Approaches such as deposit laddering can help balance liquidity and returns, while for wealthier individuals, the role of an emergency fund extends beyond simple protection.
Unexpected costs such as a broken gearbox, sudden job loss or major home repairs often arise at the least convenient time. Many people are unprepared for such situations, as various reports indicate that a significant share of households continue to live from payday to payday.
“The standard recommendation is three to six months’ worth of basic living costs. However, the key word here is ‘basic’. It is not about maintaining your current standard of living, but about covering essential expenses such as rent or mortgage payments, utility bills, insurance and food. From this perspective, building a financial cushion becomes much more realistic. In today’s rapidly changing environment, the size of the emergency fund should be tailored to individual circumstances. I recommend thinking in terms of a minimum of six months, ideally a year,” comments Radosław Jodko, investment expert at RRJ Group.
He notes that personal circumstances are critical. A single individual who can relocate or reduce costs quickly may require a smaller reserve than a household with fixed obligations such as a mortgage, vehicles and dependent children.
“This is not the place to seek higher returns. An emergency fund must meet three criteria: capital security, immediate availability and predictability. That is why traditional instruments such as savings accounts, fixed-term deposits and money market accounts are the most appropriate,” emphasises Jodko.
He cautions against investing emergency reserves in higher-risk assets such as equities or bond funds, as these may need to be liquidated at a loss during periods of market stress.
Investors seeking modest returns without sacrificing liquidity may consider a ladder strategy, which involves splitting funds across deposits with different maturities. This approach allows regular access to portions of capital while maintaining overall stability.
“If you have PLN 30,000, you can divide it into three deposits for three, six and twelve months. Every quarter, one deposit matures, providing access to part of the funds without the need to break a deposit early and lose interest,” explains Jodko.
Experts also stress the importance of starting with a clear financial overview. This involves calculating all liquid assets, including balances in current and savings accounts and deposits, while excluding funds allocated for other purposes.
“Only then should you calculate your basic monthly expenses and multiply them by six. The difference between this target and your current balance is the amount you need to save. If this seems overwhelming, start with a smaller goal, even PLN 1,000 in reserves is better than nothing,” he adds.
Automation plays a key role in building reserves. Setting up regular transfers into a savings account on payday can help establish consistent saving behaviour.
The need for an emergency fund does not diminish with increasing wealth, although its function evolves.
“Clients investing several hundred thousand zlotys a month often have a false sense of security. Their wealth is tied up in property, businesses or alternative investments. On paper they are wealthy, but in practice they may struggle to access cash quickly,” notes Jodko.
For wealthier investors, liquidity also enables them to act during market downturns.
“When the market falls, those with cash can invest. Those without it are forced to wait or sell assets at low prices. In this sense, an emergency fund is not just a safety buffer, but also a strategic tool,” he adds.
In such cases, experts recommend maintaining reserves equivalent to 12 to 24 months of expenses, reflecting higher fixed financial commitments.
For many investors, the question remains whether to prioritise building an emergency fund or investing.
“The emergency fund should come first. Without it, you are exposed to market pressure. It provides the ability to remain patient and avoid making decisions under stress,” says Jodko.
At the same time, building an emergency fund does not necessarily require postponing all investment activity. A balanced approach may involve allocating funds to both objectives simultaneously, particularly when managing high-interest debt.
Author: Radosław Jodko, RRJ Group
