There's nothing more exciting than buying your first investment.

It's the first step towards financial freedom, we tell ourselves. So, we dip our toes into the world of investing, either through stocks, mutual funds, or MP2. However, many soon-to-be investors dismiss the importance of building an emergency fund first.

Here are three reasons why you need an emergency fund before investing.

Reason #1: You'll Never Know When You'll Need It.

Emergency funds should always be accessible because you don't know when you'll need them, like a health emergency or a house repair.

Because of this, you must have your emergency fund somewhere easy to access, like a bank. If not, you may need to liquidate your investment and wait three business days for processing. Otherwise, emergencies may force you into debt before you can get your money.

You need your emergency fund during emergencies, so you must always have quick access to it.

Reason #2: You Don't Want to Interrupt Compounding Unnecessarily.

"The first rule of compounding is to never interrupt it unnecessarily."

This quote is from the late great businessman and investor Charlie Munger. It's simple, yet many fail to follow this principle because emergencies often force them to withdraw their investments. Afterward, they will neglect building an emergency fund again.

If you have an emergency fund, your investments are free from sudden withdrawals that limit their potential.

Reason #3: It Builds Your Discipline.

Discipline is an indirect effect of building your emergency fund before investing.

For instance, you computed P200,000 for your emergency fund. In the back of your mind, you want to invest some portion of it, but you know better. So you worked harder, completed your target amount, and then started investing.

Soon, when emergencies happen, you know you're adequately protected.