I think of my investment monies as "buckets". I start at the top and fill them up in order:
Bucket #1 is a $6k cash cushion in my checking account for spending, irregular expenses, and first-tier emergency savings.
Bucket #2 is an opportunity fund of $35k for good deals that come up, and/or a second-tier emergency fund. I keep this in mutual funds with a high percentage of bonds, but some stocks as well. I am currently filling this bucket now, having recently drained it to complete a refi to a 15-yr 2.75% on our primary mortgage. Edit: If we had enough equity in our homes, we would take out a HELOC to function as bucket #2.
Bucket #3 is my actual paper investment portfolio, which is riskier than bucket #2, very heavily weighted in stocks. Could be tapped in a really really bad emergency.
Bucket #4 is my 401(k) and IRA, also heavily weighted in stocks.