Great thoughts there Ben.

As another point of view, I’d say that you don’t have to actually open separate accounts for each financial goal. You can, for simplicity of managing your accounts, have just one such account, or separate into a few accounts by likely time horizon. Then, keep track in e.g. an Excel spreadsheet (or a piece of paper on a cork board) how much of the total balance you want to dedicate to each goal.

In terms of whether or not to invest the emergency fund monies, I’d say that it depends on your situation. If your job is stable, your spouse is working and also has a stable paycheck, you don’t have kids, and you have a lot saved up, I see no problem with investing the emergency fund.

How do you decide how to invest? Just estimate how long you think you’re likely to have before your next significant financial emergency. You can do this by looking at the last few years, or by brainstorming the main types of emergency you think might apply to you and then research how often those occur on average. Then, invest based on that time horizon.

If you estimate that it’s likely to be a decade or more between emergencies that would cost a significant chunk of your emergency fund (say >25%), invest in equities (in a liquid account, whether in individual stocks via a brokerage account, via mutual funds, or using ETFs).

If you estimate the mean time between emergencies is likely closer to 5 years, you’d probably be better served to invest in bonds, bond funds, or bond ETFs (possibly using TIPS to hedge against inflation suddenly jumping).

Finally, if you think you’re likely to see a major unplanned cost happen almost every year, you should probably avoid investing your emergency fund, and stick with (relatively) high-interest savings accounts or money market funds.