My thinking is a little opposite I guess. I would consider the planned money to have a definite time horizon with a target date with a specific value needed. This money would want to be kept safe as the target date approached. The true emergency fund, since it is only an estimate and may not be needed, one might take more risk with. The level of risk based on your ability to deal with it. Obviously, one needs to be prudent, you want to be sure there is some value there if you need it!

For example, someone who is not fully maxing out there tax deferred accounts and may be perhaps struggling financially, should probably keep there emergency fund safe. For someone who is fortunate to have taxable investing accounts, I think they have the ability to take the additional risk. Its not like they dont have access to money if they really need it. The key to my argument is, you may never need this money. I dont like the idea of any qualified money being used in this regard.

A good chunk in the MM will help create a buffer for a small emergency or whatever. The exact split can be determined based on personal preference and style. So to answer your question on what fund is good for this, I would say, it depends! Most would probably advise something safe, but like most things with investing, it is a personal choice based on risk and reward and the sleep at night factor.

Are you feeling lucky?

Joe mentions about not wanting to use your emergency money for your planned expenses.  But consider this the idea of using your planned money for your emergency money. As your planned money grows doesn’t this reduce the burden on your emergency money, until you spend the planned money. If the emergency happens, you just have to forgo whatever was planned with the money.

People need to be creative, many use a HELOC for there emergency fund. I do believe people should ensure themselves access to cash in an emergency, I just dont subscribe to any hard and fast rules of 6-12mos salary in a MM. It really just depends upon ones situation. Are you willing and able to take the additional risk?  Like Joe said, you need to be comfortable with what ever you choose. 

It all about not getting caught with your pants down.

Not advice, just my thoughts.

Hope this helps laserjock

Brian