<prompt> Human: Here is what Im thinking: I take my emergency fund and any other short-ish term savings like your next car, renovations, engagement ring, vacation and lump it in with intermediate term savings like a house and invest it in bond index fundsETFs. You keep track of what portions of your whole investment belongs to each type of savings car, house, renovations etc and any gains or losses get assigned to the longest term savings. According to this article the worst five-year return since 1970 for an all-bond portfolio was 14.1 or 2.7 annualized, and youd never have lost 5 in any year.Let me illustrate: say you just have your emergency savings and house savings but arent planning on buying for a few years. Lets also say you have 10K in emergency fund savings and 20K in house savings. You invest the whole 30K in a bond index funds and it gains 3. You can still say you have 10K as an emergency fund but you now have 20900 in your house savings, as opposed to 20600 if you had only invested your house savings. Lets suppose instead its a bad year and you lose 5. You can still say you have 10K in your emergency fund but your house savings have fallen to 18500 instead of 19K if you had only invested your house savings. Luckily you are still a few years away from buying a house and you have 29K still invested in bonds with which to make that money back.This seems to be the best of everything. You get more money invested which most often will give you a better return than simply parking short term savings in a savings account, while still allowing you to cash out your emergency fund at any time with no risk to a drop in value of your emergency fund. This might not be worth the effort for small, really short term savings like an engagement ring or a vacation but it should be better at least for your emergency fund. What do you think? Does this work? Am I overlooking something?EDIT: People really seem to be taking exception to the fact I labelled this zero risk. I take it back, in a way that is misleading. What I meant was I think this strategy will preserve any dollar amount you had attributed to an emergency fund. For example, lets say you have 10K as an emergency fund and 20K as house savings and you invest it all. If your 30K investment drops to 20K you still have 10K allocated to an emergency fund. What youve done is increased the risk associated with your house fund. It dropped from 20K to 10K where as if you only had your house fund invested it would have dropped from 20K to 13.3. That, of course, would be the tradeoff for the potential to gain money on 30K invested instead of 20K. In a sense, it is zero risk with regards to your emergency fund but you will be increasing the risk associated with your house savings.  <response>: You are just raising the avg maturity duration of the emergency fund vs extremely short term bonds or principal insured bank savings or CDs. That is increasing risk. Mental accounting to assign losses of the emergency fund to the house fund doesnt change the fact that the emergency fund invested in intermediate bonds had a loss. 