• Fixed Recurring Deposits in a savings account are a good option. You have access to it whenever you want because the amount is in your account itself. The great part is it is earning some interest for you.
  
  
• Fixed Deposits in the bank also are good option because you can break them at any time should the need arise.
  
  
• Investing in a Liquid/ Floating Scheme of a mutual fund is also liquid enough.
  
  
• Systematic Investment Plans help you put aside a fixed amount every month. You can get the money out within 24 hours.

Also Read: Make That Extra Money

Do not opt for very risky investments; you don't want to lose the money you have saved up for a rainy day. For instance, investing your contingency fund in the stock market is not a good idea just in case the market crashes when you need the money.

(With inputs from Kartik Jhaveri, Financial Consultant)