Why an emergency fund comes before investing

HowToInvest Editorial

Before talking about portfolios, the most important step is usually building an emergency fund — money kept somewhere safe and easy to reach.

Why it comes first

An emergency fund — often three to six months of expenses — is what stops a surprise from forcing you to sell investments at a bad time.

Then you can invest with a clear head

Once that base is in place, an example portfolio is something to keep in mind. Investing before you have a cushion adds avoidable risk.