"It's no wonder people are confused. There are two forces at work—a shaky job market that highlights the need for emergency funds, but at the other end, safe investments paying virtually nothing. The opportunity cost that comes with sitting out of the market has never been higher," says Diehl.
So while it's unwise to ignore an emergency fund, it's also not so smart to keep it all "under the mattress" and not growing (with up and down swings) in the market. With a little discipline, you can do both.