I keep a few thousand in CDs and in my MMA Savings for immediate emergencys. The rest of my EF is in FBALX, which is Fidelity's Balanced Fund. It is 60% stocks and 40% bonds. This fund has generally given quite good returns and it is less affected by large swings in the market by holding a good amount of bonds.
For example, my retirement portfolio has much more risk and a longer horizon, it is down about 8% this year. However, FBALX is down 4%. If I needed to I could take out the money, but hopefully the cash I have in CDs will cusion any unexpented expenses before I really need to dip into the mutual fund. Even if I did use my savings and cash out some CDs, most likely I will be able to build it back up without ever touching the money in the mutual fund.
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