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8 Steps to Building an Emergency Fund
Life is unpredictable. From unanticipated medical issues to surprise job loss or an emergency home repair, financial emergencies have a way of shattering even the best of plans. That is when an “emergency fund” becomes your most important financial asset.

This article provides “8 Steps to Building an Emergency Fund” to serve as your personal financial safety net. Discover “how to save money in an emergency fund” the right way, and it gives you peace of mind yet keeps your long-term financial goals safe from unexpected emergencies.

1. Why You Need an Emergency Fund FIRST off: Does it actually make sense?

The Main Reason: Protecting Your Financial Future

What it is: A set-aside pile of instantly accessible cash (and only cash) for unexpected but necessary expenses.

Why It’s Crucial:
- No Debt: Stops you from using expensive credit cards or personal loans when you need them the most.
- Safeguards Investments: Prevents you from surrendering long-term investments (such as SIPs, FDs or shares) at a loss.
- Helps Ease Stress: It can soothe the minds of those who find themselves easily worried over not knowing what the future holds.
- Economic Recovery: Makes it so you can rebound from challenges more quickly.
- Analogy: It’s the equivalent of the spare tire for your financial journey — you hope you never need it, but when you do, you’re profoundly glad to have it.
2. Here are the 8 Steps to Building an Emergency Fund

Step 1: Determine the Goal (How Much Do You Need?)
- Practical Tip: Total up 3-6 months of nitty-gritty living expenses (fixed expenses like rent or EMI, utilities, groceries, commuting costs, and insurance premiums). Don’t include discretionary spending.
- Considerations: Your job security, number of dependants and health conditions will probably affect whether you are aiming for 3, 6 or even 12 months.
- Example (Indian Context): If your monthly essential expenses are ₹30,000, then your target could be ₹90,000 (3 months) to ₹180,000 (6 months).
Step 2: Open an Account for Your Emergency Fund
- Practical Tip: Get a new term deposit or PPF account or open another bank savings account (Keep the account at a different bank than your regular account). Keep your emergency fund in a separate savings account or liquid mutual fund.
- Why: Separates money from daily spending to prevent the accidental spending of cash. Ensures liquidity.
- Considerations: Choose safety over high returns Accessing your money is easier than ever.
Step 3: Set Up Automatic Contributions (“Pay Yourself First”)
- Practical Tip: Schedule an automatic transfer from your main bank account to your emergency fund account every time you get paid.
- Why: It takes willpower out of the equation. Ensures consistency. These little, regular amounts do add up.
- Example: Automate ₹2,000 or ₹5,000 per month.
Step 4: Cut Other Things Away (Find ‘Found Money’)
- Practical Tip: Keep an eye out for “money leaks” such as unused subscriptions, daily impulse purchases, and purchases made on impulse.
- Why: You can put every penny you save on unnecessary expenses directly into your emergency fund, which will ultimately increase the amount.
Step 5: Increase Your Income (Boost Your Fund)
- Practical Tip: You might explore temporary side hustles, freelancing, selling unused stuff or working more hours.
- Why: Supplementary earnings can be applied 100% toward beefing up your emergency fund sooner without affecting your normal budget.
Step 6: Put a Hold on Other Investing (if needed)
- Practical Tip: At the cost of a few per cent for a short period of time, temporarily park all non-retirement investments (general SIPs, etc.) in the emergency fund account till it is fully funded.
- Why: Your emergency fund is your financial planning; it takes precedence over aggressive investment growth in the early going.
Caveat: Don’t stop your retirement savings if you can possibly avoid it, especially if you receive an employer match.

Step 7: Handle Windfalls Wisely
- Practical Tip: Funnel all surprise money (a tax refund, bonus, gift, or inheritance) into your emergency savings.
- Why: Windfalls bring shortcuts to your goal.
Step 8: Don’t Spend It (Except for Emergencies!)

Practical Tips: Be explicit on what is an emergency. It’s for job loss, a medical crisis, to fix the car or home, not that bleeping new gadget or that night on the beach.

Why: You’re defeating the purpose of the emergency fund, and you’re potentially leaving yourself exposed.

3. Staying on your emergency fund

Keep It Full and Handy
- Replenish: If you need to shed some money, then let building it back up be the first thing you do with your money.
- Review: Every year, review your list of critical costs, and adjust your fund target as your life situation or cost of living changes.
- Place: It should be in a safe and liquid place, such as another savings account or a fixed deposit (FD) which has an auto-renewal and partial withdrawal facility. Avoid illiquid investments.
Conclusion

To sum up, steps to building an emergency fund include setting a target, establishing a separate account, setting up regular contributions, slashing expenses, increasing earnings, and addressing windfalls strategically.

But building an “emergency fund” isn’t just about money; it’s about constructing resilience and peace of mind and giving yourself the flexibility to work toward your financial goals without being derailed by an unwelcome surprise. It’s the silent protector of your future.

Call to Action

Today, even if it requires baby steps, begin the process of building this fundamental security blanket.

Frequently Asked Questions

1. How large should an emergency fund be?

The most widely used rule of thumb is 3 to 6 months of essential living expenses. But if you have a less stable income, dependents or certain health issues, 9-12 months might make more sense.

2. Can I invest my emergency fund, or does it need to be in a savings account?

It needs to mostly be in a very liquid and safe account, e.g., a high-yield savings account or a short-term FD with easy withdrawal. Stay away from risky investments like stocks.

As you may need the money at a time when the markets are in a funk. Some others invest in ultra-safe liquid mutual funds, but make sure you get to know about their instant redemption facility.

3. If it’s my money, can I do whatever I want with my emergency fund?

It’s your money, but an emergency fund serves a very defined purpose: unexpected, unavoidable financial emergencies.

Its very application for non-emergency situations (like a holiday, a new toy, or impulse shopping) debases it and leaves you unprotected when an actual tragedy strikes.

4. What details differentiate an emergency fund from general savings?

General savings could be for certain goals, like a down payment on a house, a car or a trip. An emergency is not “wanting to have more money to meet your monthly obligations if you have an emergency”.

An emergency fund is for UNFORESEEN emergencies only, such as job loss, medical emergencies or a major home repair. It is a financial airbag, not a goal-orientated savings account.
July 9, 2025
10 Habits to Help You Reach Financial Freedom
“Financial independence” has long been a dream that seems out of reach, the privilege of the rich or the very lucky. But what if that strength is actually accumulated through the small, daily actions you take day in and day out?

This article shows the “10 Habits to Help You Reach Financial Freedom”. Through the implementation of these foundational daily and weekly practices, you can change your relationship with money, jump-start your savings, and purposefully navigate your life toward an enduring financial independence.

1. Habits that boost Your Financial Goals

Why It’s Habits, Not Goals, That Will Get You To Your Financial Promised Land

Goals are objectives, but habits are the processes that allow you to reach those endpoints. Small repeatable right choices plus time equals anything. Strive to master these financial habits, and you’ll be well on your way to big results with your personal finances.

2. The Following 10 Habits to Help You Reach Financial Freedom

1. Control Your Finances (Know where every Rupee goes)
- The Habit: Continuously monitor your income and expenses. Know your cash flow.
- How to Grow: By using budgeting apps (cough, Wallet, cough, Expense Manager) or spreadsheets, or even just a plain old notebook. Review weekly to adjust.
- Why It Works: Identifies “money leaks”, permits intentional spending and exposes new saving opportunities.
2. Pay Yourself First (Your Savings Account Should Be Automated)
- The Habit: Make saving/investing a priority by setting money aside right after you get paid, even before you spend on anything else.
- How to Grow: Arrange for automatic transfers to an account set aside for savings or investment. Invest in mutual funds through SIPs.
- Why It Works: It takes willpower out of savings, automates good behavior and accumulates wealth without you thinking about it.
3. Don’t live beyond your means.
- The Habit: Consciously consume less than you earn — regardless of income bracket.
- How to Grow: Practice mindful spending, distinguish between needs and wants, and don’t start incorporating lifestyle creep as your income grows.
- Why It Works: It generates a surplus to save and invest, which shortens the time frame toward financial independence.
4. Never Stop Learning About Personal Finance
- The Habit: Get good at investing, taxes, managing debt, and the lay of the market land.
- How to Grow: reading books, following reliable financial blogs/news (ET Markets, Livemint), listening to podcasts, and attending webinars.
- Why It Helps: Enables you to take charge of your decisions, stay ahead of the scammers, and adjust to shifts in the financial landscape.
5. Pay Down Debt (Especially High-Interest Debt)
- The Habit: Make a conscious effort to pay off and eliminate expensive debt.
- How to Grow: Apply debt repayment strategies (snowball versus avalanche), pay more than the minimum and a new kind of try to stay away from new high debt.
- Why it Works: It allows for more money to be saved or invested and eliminates wealth-robbing interest payments.
6. Diversify Your Investments
- The Habit: Diversify your money among asset classes, industries and geographies.
- How to Grow: Put your money in a combination of equity and debt funds, gold (say via SGBs or ETFs), and maybe real estate (direct or REITs). Rebalance your portfolio periodically.
- Why It Works: It lowers your risk by avoiding any one investment underperforming and blowing up your entire portfolio.
7. Think Long Term (Be Patient & Disciplined)
- The Habit: Develop a laser focus on your long-term objectives and refuse to let short-term blips in the market turn you into a reactionary panicker.
- How to Grow: Recognize the power of compounding in a period of decades. Avoid market timing. Don’t check your portfolio daily.
- Why It Works: You allow your investments to weather market tumult and realize the true benefits of compounding.
8. Check in and Modify Your Plan Regularly
- The Habit: View your financial plan as a living document and not a one-time exercise.
- How to Grow: It Plan for one (or two) reviews per year to track progress, evolve goals, change budgets and rebalance investments as life shifts (new job, marriage, children).
- Why It Works: Secures the alignment of your plan with how your life and wealth have developed.
9. Safeguarding Your Assets and Income (Insurance and Emergency Fund)
- The Habit: Get sufficiently insured for the biggest financial risks of life.
- How to Grow: Keep a healthy emergency fund. Ensuring you have proper medical insurance, term life insurance and even disability insurance.
- Why it works: It keeps unexpected events – such as an illness, accident or job loss – from torpedoing your financial progress and forcing them to sell investments.
10. Professional Guidance When Necessary
- The Habit: Don’t be afraid to seek out expert advice when you need it.
- How to Grow: In case of a complex situation or personalized strategy, feel free to consult a SEBI-registered financial planner, tax advisor or investment expert.
- Why it Works: Cut through obscurity to make sure you’re hitting the right numbers, validating your plans, optimizing tactics and avoiding demoralising mistakes.
Conclusion

In short, the “10 habits that help you achieve financial freedom” stress the collective effect of routine. Financial freedom isn’t about some magical unicorn; it’s about small daily habits of consistency, discipline and wise choices.

And when you bring these “smart money habits” into your life, it’s no longer just about growing your account balance; it’s about building a life of security, choice, and peace of mind. Keep going and watch the story of your financial fate change.

Call to Action

Choose 1-2 habits in this guide to develop now and be committed to keeping them a permanent part of your life.

Frequently Asked Question

1. How long does it take to form these financial habits?

Research estimates it takes anywhere between 18 and 254 days for an action to become a habit. Consistency is key.

Begin with one to two habits that you find easiest to incorporate and grow from there. But do not strive for perfect progress.

2. I don’t make a tonne of money; can these practices still help me to achieve financial independence?

Absolutely. Okay, so being financially free isn’t too much about just having a lot of money – it’s really about managing what you have efficiently.

While budgeting, living below your means, eschewing high-interest debt and lifelong learning are more important for people with lesser means, well-to-do individuals can find value in these habits, too. They are there to make sure you make the most of each rupee you earn.

3. How can I get started on this list if I absolutely had to pick one?

Although related, the practice of PYF (automating savings) is generally the most impactful and immediate of all. It will create a steady stream of money towards your needs, using a mechanism that does not rely on willpower alone.

4. How can I continue being motivated to both develop and maintain these habits in the long run?

Regularly check in on your “why” – your specific financial goals. Visualise achieving them. Celebrate small milestones.

Through an accountability partner or a financial community. And keep in mind that it’s consistency – not intensity – that’s the key to the long term.

5. Can you be rich in means but not property-rich, with no inheritance?

Absolutely. Financial freedom is when you have enough passive income to pay for the lifestyle you desire – the point at which you have choices, flexibility and security.

This can be accomplished by investing in stocks, bonds, mutual funds or other income-generating investments, not necessarily property. It’s something many accomplish through years of disciplined saving and intelligent investing.
July 9, 2025
Global Trade Update (July 2025): Global trade endures policy changes and geoeconomic risks

Consider the most recent UNCTAD Global Trade Update is showing global trade growing by about $300 billion during the first six months of the year. But this growth is swamped by continuing policy uncertainty and rising geoeconomic risks.

The report, which includes commentary from the WTO, details new US duties, escalating trade imbalances, and the growth of digital market dominance as leading drivers of global trade in the second half of 2025. Decisions for businesses and policy are challenged by a complicated environment that requires flexibility and strategic robustness.

What Did Industry 2025 Trade Look Like: Growth Obscured by Turbulence

In the first half of the year, world trade increased by $300 billion, a modest increase in an environment of continued volatility. UNCTAD growth rates were 1.5% in Q1 and forecasted to be 2% in Q2.

Trade in services remained a critical engine, growing by 9% in the past four quarters, showing its resilience. It is important to note that with the total value of trade, the overall volumes of trade, which increased by only 1%, this implies that there were significant price increases contributing to the total value of the trade.

There was a regional reversal, with advanced economies outperforming emerging markets. The United States recorded strong import growth of 14 per cent, and the European Union saw a 6 per cent increase in exports. By contrast, trade within the South-South also stalled even though growth within Africa was robust.

The report also emphasized deepening trade disequilibria, as the US trade deficit expanded and China and the EU registered increased surpluses, representing structural changes in global trade flows.

Policy Alterations: U.S. tariffs spark decline in global trade stability.

Trade fragmentation is flaring up, destabilising the global system, with recent trade policy changes, led by the United States, being the triggering event. U.S. President Donald Trump formally recommended new 25% tariffs on Japanese and South Korean imports to take effect on August 1 unless new trade deals are drawn up. This follows a wider US trade policy that has impacted 14 countries since April.

This belligerent approach mirrors previous warnings from the WTO, which revised down, in April 2025, its estimate for the global volume of goods trade to fall by 0.2% in 2025. The biggest risks to the global economy, it said, are the full restoration of these “reciprocal tariffs” and the potential for further conflict that could drive an even steeper 1.5% decline in global trade.

Such US tariffs and potential countermeasures carry a high risk of trade dispersion, to the detriment of close-knit production chains that could even destabilize supply chains globally. These protectionist pressures are being compounded by the growth of domestic subsidies and protectionist industrial policies. For detailed analysis on the WTO’s revised trade outlook due to tariff escalations, refer to this EFG International report.

Geoeconomic Risk and the Shifting Digital Market

Beyond the more immediate effects of tariffs, the UNCTAD report highlights a wider range of geoeconomic risks affecting the global trade outlook. Policy uncertainty, reinforced by the backdrop of geopolitical tensions and realignments of global power, maintains an uncertain business environment. Indications of a slowdown in the world economy also reinforce this cautious approach.

A new strand in the focus of the UNCTAD report is the increasing concentration in digital markets. The leading five multinational digital firms now control a whopping 48% of the world’s sales, prompting concerns over competition and consumer welfare.

Such dominance has already begun to trickle into government regulation and shifts in trade policy with respect to digital technologies. Despite this difficult task, there are positive indicators of new forms of resilience, such as improving freight indices and stepping up regional integration efforts.

Outlook: Navigating Uncertainty for Resilience

The Great Trade Review (July 2025) features an era of high economic uncertainty and the necessity of adaptation.

“Resiliency in global trade will be determined to a great extent by ‘policy clarity, geoeconomic events, and supply chain adaptability’ in the second half of 2025 as countries and firms find their way through the ever-changing and complex risk environment,” Boustany reported.

July 9, 2025
Trump threatens to impose up to 200% tariff on pharmaceuticals ‘very soon’

In a major decision announced Tuesday, July 8, 2025, President Donald Trump said his administration plans to levy tariffs of as much as 200% on pharmaceuticals imported into the U.S., and implementation of the levies could occur “very shortly” and be implemented after about a yearlong transition period.

This is a provocative initiative to encourage domestic drug manufacturing and lessen dependence on overseas supply chains for national security reasons. The threat sent an immediate chill through the global pharmaceutical industry and led to concerns that there could be effects on drug prices for American consumers.

The Tariff Threat: Details and Context

President Trump directly indicated that his administration would “reshore” the manufacturing of drugs to the United States. At a Cabinet meeting, he announced, “We’ll be announcing something on pharmaceuticals soon.”

He, however, said the tariff would perhaps be set “at a very high rate, like 200%,” and allowed a period of adjustment — “We’re going to give people about a year, year and a half to come in, and after that they’re going to be tariffed if they have to bring the pharmaceuticals into the country.”

This announcement comes after a probe of drug imports was launched in mid-April 2025, according to Section 232 of the Trade Expansion Act, authorising tariffs on national security grounds. US Commerce Secretary Howard Lutnick said investigations into both pharmaceutical and chip imports are set to end at the end of July.

This threat is part of a larger package of recent tariffs declared by the Trump administration – which also includes 50% tariffs on copper imports and a new round of “reciprocal tariffs” on 14 countries – that are set to be implemented on August 1, 2025, unless new trade agreements are negotiated.

Dependence on Foreign Pharmaceutical Supply Chains

The relevance of these suggested tariffs is that the United States is heavily dependent on international supply chains for its medicines. The US pharma industry imports a lot, especially the Active Pharmaceutical Ingredients (APIs) and generic finished drugs. The US imported approximately $234 billion worth of medicinal and pharmaceutical products in 2024.

The largest suppliers include Ireland, Switzerland, Germany, Singapore, and India by value. On the other hand, by value, China and India remain the largest suppliers, with a combined share of 57.6% in the drug import total in 2023. China alone is a major supplier for a number of critical drugs, and most imports for medicines like ibuprofen, hydrocortisone and penicillin rely on the country.

The administration’s justification for these tariffs is a concern that this large reliance on other countries, particularly for life-saving drugs, is actually a major national security vulnerability.

Potential Effects: Prices, Supply, and Industry Reaction

The fallout over the 200% tariff on pharmaceutical imports is feared to be the main drawback. The most immediate and farthest-reaching effect would be a sharp increase in drug prices for American consumers, especially for generic and lifesaving drugs that depend on these imports.

Even if companies can quickly switch to domestic manufacturing or find new, tariff-free sources, such a sharp tariff could also result in widespread supply chain disruptions and exacerbate drug shortages that already plague the United States.

Some drug manufacturers had already started announcing plans for US production ahead of policy changes, albeit before President Trump took office, a trend which these new tariffs are sure to accelerate.

Pharma shares, especially Indian drug makers with a prominent US presence such as Lupin, Sun Pharma and Dr. Reddy’s, closed mixed on Wednesday after the news was reported, reflecting the overall market uncertainty.

Yet moving complex pharmaceutical production would be costly and time-consuming, making it next to impossible for the industry.

Outlook and Policy Path Forward

President Trump’s overt threat to impose steep pharmaceutical tariffs opens a new chapter in his trade agenda, which is set on a sweeping remake of the United States’ drug supply chain.

While the precise extent to which the industry will be affected by any proposed policy remains uncertain, it is undoubtable that the administration’s commitment to increasing domestic pharmaceutical manufacturing and decreasing reliance on exports highlights the urgent need for global pharmaceutical companies to focus on future prospects of the pharmaceuticals in the U.S. market. More on the Section 232 investigation into pharmaceutical imports can be found in this DLA Piper insight.

July 9, 2025
China CPI inflation rises marginally in June, PPI shrinks for 33rd month

China’s National Bureau of Statistics (NBS) today, July 9, 2025, released its latest inflation figures, painting a mixed economic picture. The China CPI inflation saw a marginal 0.1% year-on-year rise in June, reversing four months of declines.

However, the China PPI (Producer Price Index) continued its prolonged slump, contracting by 3.6% year-on-year, marking the 33rd consecutive month of shrinkage at the factory gate. This divergence highlights the ongoing challenge for policymakers: stimulating domestic demand to address deflationary pressures while managing industrial overcapacity.

CPI’s Marginal Rebound: A Glimmer of Hope?

Consumer prices in China edged up in June, offering a slight glimmer of hope for policymakers. The China CPI inflation registered a 0.1% year-on-year increase for June, snapping a four-month streak of declines, though it dipped 0.1% month-on-month. According to the NBS, this rebound is largely attributed to the government’s pro-growth fiscal and monetary stimulus packages aimed at boosting domestic consumption.

A significant factor was the recovery in prices of broad industrial consumer goods, which saw their year-on-year decline narrow. Crucially, core CPI (excluding volatile food and energy prices) continued its upward trend, reaching 0.7%, marking a nearly 14-month high and suggesting some underlying improvement in demand.

Specific categories contributing to the rise included daily necessities (up 0.8% year-on-year) and clothing prices (up 0.1% year-on-year). Even prices for gold and platinum jewellery saw significant increases, reflecting a shift in consumer spending patterns.

PPI’s Prolonged Deflation: A Deep-Seated Challenge

In stark contrast to the consumer side, China’s PPI continued its prolonged deflationary trend, dropping 3.6% year-on-year in June. This decline widened from May’s 3.3% fall and marks the 33rd consecutive month of contraction at the factory gate, representing the steepest fall since July 2023. On a month-on-month basis, the PPI decreased by 0.4%.

This sustained deflation at the industrial level is primarily driven by subdued domestic demand and cautious consumer confidence. Analysts and the NBS point to persistent industrial overcapacity, which has led to fierce “price wars” across various sectors as manufacturers compete for limited demand.

Additionally, lower energy prices, partly due to the growth of solar, wind, and hydropower, have reduced power generation costs. Pressure on export-reliant industries from slowing global trade and rising protectionism further exacerbates the decline.

The implication of this deep PPI deflation is a squeeze on corporate profits, potentially leading to reduced investment, employment, and a broader drag on economic growth.

Divergent Trends and Economic Implications

The simultaneous marginal rise in CPI and prolonged shrinkage in PPI presents a complex paradox for China’s economic management. While a positive CPI is a welcome sign for consumption and suggests that stimulus efforts are having some effect on household spending, the deep PPI deflation indicates that manufacturers are struggling to pass on costs.

This reflects fundamental weaknesses in industrial demand and highlights the challenge of overcapacity. The Chinese government continues to roll out efforts to stimulate the economy, including consumer goods trade-in policies and e-commerce promotions aimed at boosting domestic consumption.

However, the People’s Bank of China (PBOC) faces a delicate policy dilemma: how to stimulate demand without exacerbating industrial overcapacity or introducing new financial planning. This ongoing factory-gate deflation in China could, however, have a broader impact, potentially helping to ease global inflation pressures, particularly for commodity prices, as China exports its excess supply at lower costs.

Outlook and Policy Outlook

While the marginal CPI rise offers a glimmer of hope for a demand recovery, the prolonged China PPI shrinkage signals that the Chinese economy is far from a robust and balanced recovery. The underlying issues of weak industrial demand and overcapacity remain significant headwinds.

The focus for policymakers will continue to be on strengthening domestic demand, addressing industrial overcapacity through structural reforms, and fostering a more balanced economic structure to ensure sustainable growth and alleviate persistent deflationary pressures. For expert analysis on China’s economic outlook and policy challenges, consider reports from the Council on Foreign Relations.

July 9, 2025
As Trade Worries Linger, Edmond de Rothschild AM Prefers European Over US Equities

Today, Edmond de Rothschild Asset Management (AM), a UK-based company with its headquarters in Paris, revealed a major strategic shift. In its outlook for the second half of the year, AM makes no secret of moving to a stance that is clearly pro-European and shorting US stocks relative to US stocks.

The move comes amid increasing trade fears and a confusing geopolitical landscape. The firm notes that even as markets around the world continue to gyrate, Europe is becoming a more interesting investment story, relative to the US.

Why We Are Underweighting US Equities

Edmond de Rothschild AM’s sceptical view on US stocks is mainly due to the ongoing trade dispute and a murky US policy. This is how Benjamin Melman, Global CIO at Edmond de Rothschild AM, put it: “The US/China negotiations could last a long time, and those with Europe are not going to be simple.

We have for the past six months been modestly underweight equities, particularly US equities, and in the dollar.” The new US tariffs rising on imports from Japan and South Korea, which will take effect on August 1 unless there are new trade pacts, dramatically demonstrate the erratic US trade policy further.

Together with worries about the high asset valuations in the US market and policy risk in general, all that feeds into the firm’s prudential stance on US assets with a lesser exposure on their portfolios.

European Stocks: A “Powerful New Narrative” It was a mixed start to the week, with economic data out of the Eurozone delivering support to the majors.

Completely opposite to their view of the US market, Edmond de Rothschild AM is responding to an exciting ‘new narrative’ in Europe. “There is a real continent in the world, which is again in profound transformation, on the basis of new political and economic ambitions, and that continent is Africa,” said Caroline Gauthier, co-head of equities.

There are a number of reasons for this good feeling. The industrial strategy also includes the “Draghi plan” on European competitiveness, which emphasises the need to promote innovation and reform competition law and is viewed as a serious booster.

And the resurgence of German leadership along with rising defense spending across the continent will mean stronger economic prospects. This regained confidence can be seen in the strong recovery of Eurozone equities in 2025, with a spectacular +12% gain (+25% in USD terms), confirming Europe’s reassertion of its economic fate.

The firm emphasizes the attractiveness of European small caps, noting the domestic nature of this category is “partly protected from trade-related tensions and dollar volatility” and is central to Europe’s manufacturing base and industrial innovation.

Portfolio Strategy and Broader Considerations

In global equities in general, the stance of Edmond de Rothschild AM is still slightly underweight, reflecting an overall cautious perspective in a context of market volatility. The move to bring in European equities is part of its strategy to diversify and to move into alternative asset classes that can still provide some level of resiliency.

In addition to equities, the firm remains positive about short-term high-yield debt and other forms of fixed income which it deems “safe havens” on the basis of their high carry and economic cycle. Jacques-Aurélien Marcireau, co-head of equities, highlights a refocusing on themes such as resilience and health as the dominant macro investors’ trends that are driving investment in all asset classes around the world in order to build robust, innovative and adaptive portfolios. You can read more about Edmond de Rothschild Asset Management’s investment strategies and outlook on their official website. You can read more about Edmond de Rothschild Asset Management’s investment strategies and outlook on their official website.

Conclusion

The short-term outlook by Edmond de Rothschild AM highlights the fact that ongoing trade concerns and a shifting geopolitical environment are forcing investors to rethink conventional market hierarchies.

The firm’s unique conviction in European equities, with particular emphasis on small caps, reflects a confidence in Europe to offer resilience and attractive investment opportunities in an increasingly fragmented and uncertain global investment landscape.

July 9, 2025
Indemnity: What It Means in Insurance and the Law
Have you ever looked at the word “indemnity” in a contract or in an insurance policy and thought: What’s really behind this?” Indemnity is more than a legal concept – it is also a fundamental basis of financial protection, whether in law or contract.

This guide will do things like help take “indemnity” out of the mystery black box and explain “what it means in insurance and the law”, get to its “core principles”, show you how it actually “works in the wild” and explain why it’s important for fair dealings and being able to sleep at night without waking up in a cold sweat thinking someone has taken out a second mortgage on your dog.

1. What Is Indemnity: The Fundamental of Making Whole

Restoring to the Original Position: The Essence of Indemnity

Core Meaning:

In general insurance terminology, indemnity (from Latin ‘indmenis’, meaning ‘unhurt’, ‘uninjured’ or ‘damage’) is an agreement whereby a party (indemnitor) promises to compensate for the loss or harm sustained by another party (indemnitee).

The “Making Whole” Principle:

Recover should place the indemnitee (the party who is indemnified) in the same economic position as before the loss or damage and may neither enrich nor impoverish the indemnitee.

Distinction from Guarantee:

A guarantee is for the purpose of assuring the performance of a third party, whereas indemnity relates to making good a loss.

2. The Indemnity Principle in Insurance – The Basis of Cover

The Role of Indemnity in Insurance Policies

Core Principle: Indemnity is based on the principle that an insurance contract is signed to indemnify (pay back or make whole) the insured in the event of the loss. The insured can receive only the actual amount of the loss.

How It Works in Insurance:
- Indemnity for proven loss: An insurer is liable to cover only the actual documented financial loss sustained by the named insured up to the limit of the policy.
- Insurable interest: The insured typically must directly suffer from the loss. And for adverse news, it must be ascertained if the insured actually has a commerce that will be affected by the loss (may even have changed). No “dual-instraints”, meaning this: the insurer should be unable to put themselves in a position to profit from loss. And this should also deter what is termed “moral hazard” – deliberately causing loss (or otherwise) to get a payoff.
- Subrogation: Condition by which an insurer who has taken over another’s loss also has the right to legally pursue a remedy from a third party who may be responsible for the loss. This is to prevent the insured from receiving double indemnity and to allow the insurer to recover any payment made.
- Contribution: When the same risk is covered by different insurance companies, each insurer contributes in proportion to the amount insured, and all the insured amounts will be prevented from exceeding the actual loss.
Key Considerations in Insurance Indemnity:
- Insurable Interest: The insured needs to be financially involved with the thing that is being insured.
- Actual Cash Value (ACV) vs. Replacement Cost (RC): ACV is the cost minus depreciation, whereas RC is the new replacement cost, and both are based on the indemnity principle.
- Deductibles/Excess: These are meant to make sure the policyholder suffers a portion of the loss in line with the principle.
Indian Insurance Scenario: Concepts of indemnity and subrogation form an integral part of Indian insurance law and practice, and there is no ambiguity in the insurance law with regard to the principles of fairness to form the basis of claims settlement being laid down under the insurance acts. For details on the principle of indemnity in Indian insurance, refer to this legal overview by iPleaders.

3. Indemnity at Law: A Wider Legal Remedy

Outtake: Indemnity Provisions in Contracts & Legal Duties that Can’t Be Covered by Insurance

Contractual Indemnity:

Definition: A contract provision in which one party (usually person) agrees to assume a product’s future liability What It Means: A (contractual) provision under which one party (the indemnifying party) agrees to take on certain liabilities of the other party (the indemnified party) under particular circumstances.

Common Uses:
- Service Contracts: A vendor may indemnify a customer for any claims resulting from their own negligence.
- Construction Contracts: A contractor may agree to indemnify the owner for a slip and fall on-site.
- Mergers & Acquisitions: A seller could indemnify the buyer against unidentified liabilities.
- Intellectual Property: A licensee could be indemnified by a licensor for patent infringement.
Importance: Indemnity clauses allocate risk between parties, promote legal certainty, and may limit exposure.

Statutory/Implied Indemnity:
- Definition: Indemnity that is paid by law, even if there is no express contractual provision.
- Illustrations: Indemnity of an agent acting within the scope of his authority or contribution between joint tort-feasors (persons jointly responsible for a wrong).
- Indian Legal Perspective: In Indian law, the term “contract of indemnity” has specifically been defined under Section 124 of the Indian Contract Act, 1872, showing the importance of the concept in the Indian legal system.
4. INDEMNITY RESTRICTIONS AND COMPLEXITIES

When Indemnity Isn’t Absolute
1. Policy Limits / Caps: In insurance, compensation will never exceed the sum insured or the policy limits. In contracts, there may be agreed-upon caps on liability.
2. Exclusions: There are certain exclusions in insurance policies (i.e., willful misconduct, war) for which there will be no indemnity. Contractual indemnity provisions are also circumscribed.
3. Fraud / Illegal Acts: Losses due to the indemnitee’s own fraud or illegal acts are typically not covered by indemnity.
4. Duty to Mitigate: The indemnitee is under a duty to mitigate its loss even when it anticipates being indemnified.
5. “All or Nothing” vs. Proportional: An indemnity could be triggered only for certain claims or share losses in proportions.
6. Interpretation issues: The exact language used in indemnity clauses can cause confusion and become a source of legal battles, so draughting is key.
Conclusion

In conclusion, indemnity is an important principle that we certainly will understand and can use to do the following: be fair to those injured place the risk with the appropriate party, and offer financial protection that is essential.

It performs an “insurance” role by breaking the link between loss and profit so that insurers can subrogate, and it is widely used “in law” through contracts and statutes. Indemnity is so much more than a word—it is a critical concept that serves as the power behind equity and is a critical component of addressing and assigning the risk and important financial protection.

By comprehending its intricacies, people and businesses are able to take better control of risks, protect their assets, and do business with more confidence in an uncertain world.

Call to Action

Check your insurance and legal coverage for indemnity clauses, and get professional help if necessary to ensure you are covered.

Frequently Asked Questions

1. Is indemnity identical with compensation?

They’re related, though not exactly the same. Compensation Compensation is a term that refers to payment for loss or injury.

Indemnities refer to making an injured party whole by restoring them to the financial condition they were in prior to the loss (no more, no less). Indemnity is compensation, but it also makes one whole again.

2. I can gain from an insurance claim due to the principle of indemnity?

No. Insurance’s principle of indemnity operates to ensure that you do not make a profit from a loss.

The insurer will pay you only to the extent of the financial loss you actually sustained, up to the limits of your policy: you are to be “made whole”, not better off than you were to begin with.

3. | What does the term “indemnity clause” mean in a contract?

An indemnity clause is a clause in a contract in which one party agrees to secure the other against the potential loss or damage that may be incurred in the future due to the user’s behaviour.

It’s employed to shift risk from one party to another, and it delineates who pays for certain types of claims or liabilities in a business agreement.
July 8, 2025
Reinsurance Definition, Types, and How It Works
When you purchase insurance coverage – for a car, for your home, for your health – you’re buying it directly from an insurance company. But you might have wondered how such companies deal with the extraordinary risks they bear, especially following catastrophes.

The answer lies in “Reinsurance”. This complete reinsurance guide will help clear the fog surrounding “reinsurance”, giving you a straight “definition” and explaining the different “types” and detailing exactly “how it works”. We used it to balance the worldwide insurance system, safeguarding an insurance company and, ultimately, the policyholder.

What is reinsurance?

The Risk Management Foundation of Risk Management for Insurers

Reinsurance is essentially “insurance for insurance companies”. It’s a process in which an insurance company (the “ceding company” or “cedent”) cedes some of its risks to another insurer (the “reinsurer”).

Purpose:
- Risk mitigation: Primary insurers can get protection from large or catastrophic losses.
- Capital Management: Releases capital for primary writers, enabling them to write more business.
- Stabilization: Assumes that insurers could go bankrupt from unexpected big claims and makes sure that they have the money to pay their policyholders.
- Specialist domains: Reinsurers frequently bring expertise in specialist or complex risks.
Analogy: Consider it a financial shock absorber for the insurance sector.

Key Players: Reinsurer, Ceding company/Cedent, Policyholder.

2. Different Types of Reinsurance: Structuring the Risk Transfer

Facultative vs. Treaty Reinsurance (The Transaction Basis)

Facultative Reinsurance:
- Definition: Reinsurance for particular individual risks or certificates, established on a case-by-case basis.
- Use: With ABN For non-standard, hazardous or Ansqqbn risks not covered by the treaty.
- Benefit: Provides the ceding company with flexibility and the reinsurer the ability to pick and choose risks.
Treaty Reinsurance:
- Definition: An arrangement which applies to an agreed portfolio of risks (e.g., all motor business written during a certain period) for a defined period rather than to individual policies.
- When to Use: Continuous, periodic transfer for many policies.
- Advantage: Ensures automatic cover and administrative convenience for both.
- Reinsurance that is Proportionate and those that aren’t (The Payment Basis)
Proportional vs. Non-Proportional Reinsurance (The Payment Basis)

Proportional Reinsurance:

The reinsurer cedes a prorated percentage of the premiums and losses incurred by the ceding company.

Types:
- Quota Share: The reinsurer receives (pays) a fixed point percentage of each and every policy (premiums (losses).
- Surplus Share: A share of a policy above the ceding company’s retention limit, which is taken by the reinsurer.
- Benefit: Simple, consistent risk sharing.
Non-Proportional Reinsurance:

The reinsurer pays only to the extent that losses exceed a specified level for the ceding company known as a “retention” or a “priority”. Proportional sharing of premiums – the reinsurer does not share premiums.

Types:
- Excess of Loss (XoL): Purely the most common. Reinsurers will pay losses that exceed a certain dollar amount, up to a limit.
- Example: The ceding company retains the first 5M above that.
- Stop-Loss: The reinsurer is only responsible for paying when the accumulative loss ratio in a portfolio reaches a specific percentage or limit.
- Benefit: Insulates the ceding company against potential unanticipated highlosses, ,including natural and man-made disasters.
3. How Reinsurance Functions: The Risk Transfer Lifecycle
- Covered: How the Mechanics of Reinsurance Could Affect Climate Goals
- Policy Issuance: A policyholder who has a risk is issued a policy by a primary insurer of the risk.
- Risk Assessment & Ceding: The ceding company evaluates its risk. Then reinsurance kicks in: If the risk is too great or too far outside this comfort zone, the company elects to cede part of it to a reinsurer.
- Reinsurance Agreement:
- Facultative: The insurer approaches the reinsurer for obtaining reinsurance cover for a particular risk and negotiates terms, premium, and a share of risk.
- Treaty: A portfolio of risk is using an already negotiated contract to dictate how the risk is shared.
- Premium: The ceding company incurs a reinsurance premium to the reinsurer based on the portion of the risk that it transfers.
- Loss Event: The policyholder experiences a covered loss and the underlying insurer pays the claim.
- Reinsurance Recovery: An insurer gets indemnity from the reinsurer whenever a loss is above the ceding company’s retention (in the case of non-proportional) or the loss is within the shared proportion (for proportional).
- Payout: The reinsurer would then pay the agreed share of the loss to the ceding company. Thanks to this backend transaction, the policyholder is not impacted.
- Regulatory: Regulators (such as IRDAI in the Indian context and international regulators) supervise the reinsurance industry to avoid insolvency and ensure fair practices.
4. The Broader Impact: Benefits of Reinsurance for All

More Than Insurers: How Reinsurance and Its Modest Profit Helps the Economy and Consumers

For Primary Insurers:
- Increased ability to underwrite additional policies.
- Improved solvency and financial stability.
- Reduced volatility in earnings.
- Access to specialists in difficult risks.
For Policyholders:
- wider accessibility of covers for big or difficult risks.
- More security and assurance that damage would be paid, even after a major disaster.
- Possibly lower premiums (indirectly, as reinsurers stabilize the market and lower the primary insurer’s cost of capital).
For the Economy:
- It facilitates economic development by allowing firms to share risks.
- Enables mega projects (eg infrastructure) with a high volume of insurance being underwritten.
- Financial markets stabilize as catastrophic risk is spread globally.
You can find more benefits of reinsurance for both insurers and the broader economy in this article from OneAssure.

Conclusion

In essence, reinsurance is the vital “insurance for insurers” that enables insurers to manage risk efficiently. We discussed its “types” (to be facultative or treaty, proportional or non-proportional) and its basic “how it works” mechanism.

Frequently invisible to the general consumer, reinsurance is the cornerstone of the worldwide insurance industry, allowing it to assume massive risks and to deliver the crucial financial protection that is integral to people, companies and economies around the world. It is the one protecting us when nobody is looking – when the unthinkable occurs and claims are paid.

Call to Action

Understand all the complex layers of coverage in your own insurers. Knowledge of reinsurance can make you more informed of how the world of insurance works and the protections that are out there to provide security for your money.

Frequently Asked Questions

1. How does reinsurance affect my individual insurance coverage or claims?

No, not directly. Your contract is always with your original insurance company. Reinsurance is a backdoor arrangement between insurers.

You make claims against those underlying layers of insurance, and those layers’ ability to pay is enhanced by their own arrangements to purchase reinsurance.

2. What distinguishes an insurance company from a reinsurance company?

An insurance firm extracts premiums directly from consumers or companies seeking to insure themselves, taking on that risk.

A reinsurance company transacts business with other insurance companies, the effect being to cede a certain part of its aggregate risks.

3. Why would an insurer require reinsurance? Why not just keep all the premiums?

If they keep 100 per cent of premiums, they also have to absorb 100 per cent of losses. They reinsure in order to be able to transfer very large or catastrophic-type risks that could lead to their insolvency (e.g., a huge earthquake, a large industrial accident).

It allows them to write more risk and stay safe and financially solvent, offering critical capacity to the market.

4. Is reinsurance regulated?

Yes, reinsurance is very regulated, just perhaps not by the same entities as primary insurance. Reinsurers (IRDAI in India, NAIC in the US, PRA in the UK, etc.) are also regulated to be financially sound, to have enough capital to pay claims and to treat customers fairly because they are the bedrock on which the financial support is underwritten to the customers.

5. What are the biggest reinsurance companies in the world?

The biggest and best-known reinsurers globally will include Munich Re, Swiss Re, Hannover Re, SCOR and Berkshire Hathaway Reinsurance Group, some of the largest by premium receipts and size of risk they reinsure.

These businesses are carried out internationally, assuming risks from insurers in disparate continents.
July 8, 2025
Worldwide Risk Landscape on July 8, 2025: From Geopolitical Tariffs to Disaster Preparedness and Audit Readiness

Worldwide Risk Landscape on July 8, 2025, is characterized by an ever-changing matrix of economic, environmental, and regulatory pressures. Highlights include rising tariff disputes, the necessity of improved disaster response and the ongoing development of audit readiness for small businesses.

This complex web of threats requires cities and nations to act preemptively to equip themselves with resilience in an ever more uncertain world.

Geopolitical Tariffs: A New Economic Front

July 8, 2025 – U.S. President Donald Trump today revealed new 25% import tariffs on Japan and South Korea effective Aug. 1 – if new trade deals are not reached. It comes after a 90-day hiatus on tariffs. It is part of a broader US trade policy announced in September 2025 targeting 14 countries and covering products ranging from 25% to 40%, in a bid to address what the US sees as trade imbalances.

The announcement has sent immediate ripples through global markets and diplomatic circles, accelerating hands on both Asian allies and US officials to step up negotiations in the days ahead. This new economic front adds another layer of complexity to the global risk landscape, which has the potential to disrupt global supply chains, weigh on investment decisions, and prompt retaliatory measures that further splinter the world’s commerce.

Disaster Planning As The New Climate Imperative

Outside the realm of trade, the global risk landscape is increasingly influenced by climate change, rendering disaster preparedness more essential than ever. The natural disasters increase without a pause, more and more frequent and severe ones, bringing a serious threat to the infrastructure, economy and human life.

Global losses of more than $200 billion were suffered in 2024, reveals recent data. Projections indicate that in 2030 alone, the world will experience some 560 disaster events, meaning a little over 1.5 moderate-to-large disasters per day. Echoing this urgent call, the World Resilient Recovery Conference (WRRC), which took place in Geneva in early June 2025, released its Ten Priority Investments to Ensure Preparedness for Resilient Recovery.

These actions are intended to bolster resilient recovery and enhance local community leadership in the face of climate-related events, underlining the importance of effective disaster preparedness in addressing more extreme weather and future global resilience. Details on the Ten Priority Investments can be found on ReliefWeb.

Audit Readiness: Navigating Evolving Compliance

Audit readiness is no longer only about technology, but it’s also about the changing environment and shifting regulations for businesses. One major trend is the increasing use of Artificial Intelligence (AI) in auditing; AI streamlines the process of analysing large data sets, helps identify risks, and detects abnormalities, making the audit process more efficient and accurate.

This, in turn, requires companies to keep their data clean and available for audits driven by AI. Regulation is also becoming much stricter. The EU’s NIS2 Directive and DORA and operational resilience in 2025 The EU’s NIS2 Directive, designed to boost the cybersecurity of crucial sectors, and DORA, which stands for Digital Operational Resilience Act.

Which has been applied as of 17th January 2025 exclusively for the financial sector, are introducing strict requirements regarding the management of ICT risks and incidents. In addition, the growing significance of ESG (Environmental, Social and Governance) compliance management systems in 2025, especially in Europe, requires extensive reporting and internal control.

This challenge is only made more difficult by a growing risk environment on the cybersecurity front because the surge in ransomware and supply chain attacks obviously requires strong internal controls for audit considerations.

The Interconnected Risk Matrix: Building Proactive Strategies

These separate risks are deeply interconnected. When we have geopolitical tension, like the tariffs we just said, and then we go directly to a globally intertwined supply chain, that global supply chain is more subject to the vagaries of natural disasters.

At the same time, the requirement for IT security and operating robustness to satisfy emerging audit and compliance requirements is simply escalated by these intricate interconnections. Thus, the construction of comprehensive risk management mechanisms that foresee and respond to such complex intractable threats is a key priority.

To withstand volatility, multinational companies should be proactive in their approaches. Driving international collaboration and technology adoption for resilience and robust compliance are key to long-term corporate resilience and global well-being in the global risk landscape of 2025 and beyond.

July 8, 2025
Global Personal Finance Navigates Inflation, BNPL Trends, and Stable Savings on July 8, 2025

As of today, July 8, 2025, people face an increasingly convoluted personal finance story, as global personal finance navigates inflation that refuses to go back to normal anywhere around the world; Buy Now, Pay Later (BNPL) takes off at a blistering rate of speed; and stockpiles of savings continue to fight against economic shifting.

Together, these ingredients are altering how households manage their budgets, spend and plan for the future. In this article we will give insight into how consumers are adjusting and offer advice from financial professionals on staying financially healthy.

Exorbitant Inflation on Household Budgets

The inflation picture as it stands today is still a significant drain on personal wallets. Headline inflation remained elevated above pre-pandemic levels in many economies, at least to date, with the OECD’s most recent data available as of July 3rd, 2025, showing 4.0% in May 2025.

In other words, the cost of living is still climbing; it’s just doing so at a slower pace than during periods of peak inflation. The direct effect on personal finance is obvious: reduced purchasing power, higher everyday expenses as items like food, fuel and utility bills rise, and a squeeze on discretionary spending.

This is especially challenging for savers. While nominal savings may be accumulating, their real value after adjusting for inflation is being eroded, keeping one of life’s quests — that of stable, inflation-beating savings — as an uphill journey for households the world over.

Convenience, popularity, and growing concerns about BNPL

The popularity of Buy Now, Pay Later (BNPL) continues to skyrocket, with the value of global BNPL payments forecasted to hit US$39.79 billion in 2025 – year-on-year growth is striking. The attraction of the option is the freedom it offers and the illusion of no-interest payments, especially to younger demographics such as Millennials and Gen Z, who are used to working with it for online sales.

But there is a downside to this convenience. A majority of users regret BNPL – in a recent survey a good 40% of Americans regret after they comprehend the total costs. What’s more, late payments are increasing, with 41% of users of BNPL services reported making a late payment in the last 12 months versus 34% a year ago.

The downsides to such services include racking up multiple BNPL debts, losing track of payments (almost one-third of users say as much) and the threat to credit scores from missing instalment payments. More statistics on BNPL usage and concerns can be found in the Motley Fool’s 2025 Buy Now, Pay Later Trends Study.

Developing Financial Resilience: Astute Savings in a Changing Environment

Finding ways to handle this effectively calls for some smart and practical savings plans. Firstly, people should focus on finding savings accounts with competitive interest rates that can outpace inflation. In India, RBI’s Floating Rate Savings Bonds are still going strong at 8.05% returns for the July-December 2025 period, which stands to trump many conventional bank fixed deposits and give a government-backed, less-risky option for conservative investors.

Second, the ancient virtues of budgeting and expense tracking are just as important as ever. Knowing where the money’s going is how you start to find potential savings. Thirdly, prioritize debt. High-interest debts such as credit cards should be prioritised for aggressive repayment, and while BNPL payments are usually interest-free, they need to be responsibly managed to avoid late fees and an impact on credit scores.

And ultimately, consider saving more broadly than money, focusing on longer-term goals, to provide more insulation against the disintegrating effects of inflation.

Final word

“The state of personal finance on July 8, 2025, is one heavily influenced by the persistent global inflation attack on household budgets, the two-faced BNPL phenomenon—a lurking convenience or debt risk.”

In order to attain fiscal wellness in today’s economy, it is essential to actively manage personal finances, which has to do with smart savings plans, a vigilant budgeting system and being mindful of business practices. We would advise readers to check things should their circumstances be in any way complicated, as well as seek professional advice to protect their financial future.

July 8, 2025