An in-depth look at calculating, allocating and managing assets for unforeseen financial events
Building an emergency reserve is a fundamental pillar of individual and family financial health. This is a financial amount allocated specifically to cover unexpected and urgent expenses, such as job loss, health problems or unpostponable repairs, without the need to take on high-interest debt or liquidate long-term investments at unfavorable times. Understanding how to set up an emergency fund and, crucially, where to leave the money to yield safely are essential steps to ensuring economic stability. This article offers a technical analysis of the calculation methodology and criteria for selecting assets suitable for this objective.
Definition and calculation of the ideal amount
The emergency reserve, also known as a liquidity cushion, is capital that must cover the fixed and essential costs of an individual or family for a certain period. The first step towards structuring it is an accurate diagnosis of monthly expenses. It is imperative to differentiate essential costs from superfluous expenses. Essential costs include:
- Housing (rent or provision of financing)
- Food
- Consumption bills (water, energy, gas, internet)
- Transport
- Health (health plan, ongoing medications)
- Education (tuition fees)
Reserve sizing is calculated by multiplying the total value of these monthly costs by a time factor, generally between 3 and 12 months. The definition of this period directly depends on the stability profile of the source of income. For professionals with high stability, such as civil servants, a reserve of 3 to 6 months may be sufficient. For self-employed professionals, freelancers or entrepreneurs, whose income is more volatile, a reserve of 6 to 12 months is more prudent.
Allocation criteria: security and liquidity
Choosing where to allocate emergency reserve resources is as critical as its calculation. The selected assets must necessarily meet two main criteria: high security and high liquidity. Profitability is a secondary factor, whose main objective is to protect the purchasing power of capital against inflation, and not to generate significant gains.
- Security: Refers to low volatility and minimal credit risk. The primary objective is capital preservation. Therefore, variable income assets such as shares, real estate funds or cryptocurrencies are unsuitable for this purpose due to the risk of loss of principal value over a short-term horizon.
- Liquidity: It corresponds to the ease and speed with which an asset can be converted into cash without significant loss of value. For an emergency reserve, liquidity must be daily, ideally with redemption on T+0 (on the same day) or, at most, T+1 (on the business day following the request).
Comparative analysis of high liquidity and low risk assets
Considering security and liquidity criteria, the Brazilian financial market offers some suitable investment options for allocating the emergency reserve. Below is a comparative analysis of the main instruments.
- Selic Treasury (LFT): Post-fixed federal public security, whose profitability follows the economy’s basic interest rate (Selic Rate). It is considered the asset with the lowest credit risk in the country, as it is guaranteed by the National Treasury. It offers daily liquidity (T+1) and low volatility, making it the reference option for this objective.
- CDBs with daily liquidity: Bank Deposit Certificates issued by financial institutions. To be adequate, they must offer daily liquidity and a remuneration of at least 100% of the CDI (Interbank Deposit Certificate), an indicator that is very close to the Selic Rate. It is essential to check whether the issuing institution is solid and whether the investment is covered by the Credit Guarantee Fund (FGC), which guarantees amounts of up to R$250,000 per CPF per financial conglomerate.
- DI funds with zero management fee: Investment funds that allocate the majority of their assets in public bonds linked to the Selic or in low-risk private bonds. The main advantage is T+0 liquidity in many cases. However, it is crucial to select funds with zero or very low management fees, as high fees can erode profitability and make them less efficient than direct investment in the Treasury Selic.
Structuring an emergency reserve is an essential and non-negotiable financial planning measure. Its calculation must be based on a careful analysis of essential expenses and the individual’s income stability profile. The allocation of resources must unconditionally prioritize capital security and immediate liquidity, relegating profitability to a secondary role of inflation protection. Assets such as the Treasury Selic, CDBs with daily liquidity and FGC coverage, and DI Funds with zero rate represent the safest and most efficient alternatives for this purpose, and it is up to the investor to analyze the specific conditions of each financial product.
