How much, and where
A reserve covering six months of household expenses — including EMIs, premiums and school fees, not just groceries — is a reasonable starting point. If your income is variable or you are the only earner, nine to twelve months is more appropriate.
This money is not an investment. It should sit where it can be reached within a day and cannot fall in value: a sweep-in deposit, a liquid fund, or a combination. The return matters far less than the certainty.
Why it comes first
Without a reserve, every unexpected expense becomes a forced sale — usually of the long-term investment that was doing the most work, and usually at a bad moment. The emergency fund is what allows the rest of the plan to be left alone.
Build it before starting any long-horizon goal, and top it up whenever it is used.