[scfr]

Thank you for your service to the country!

Please think of your Emergency Fund not only as a way to cover unexpected expenses or setbacks, but also as a safety cushion for your wife and children if, God forbid, something should happen to you.

My personal opinion/suggestion would be that you build the EF up to at least $7K (to cover 3+ months expenses) and that you keep that money invested in liquid accounts or, at a minimum, conservatively invested. If you really want to have some of your EF in a mutual fund, what about a conservative and broadly-diversified one like the Vanguard STAR Fund, (wich happens to have a minimum investment of only $1K)?

Once you have a really good EF, then that would be the time to start thinking about other outside investments which can be as aggressive as you are comfortable with.

I'd also suggest that you discuss your options with your wife, and try to do something that you are both comfortable with.