So location of your emergency fund is one of those tricky "it's up to you and your circumstances" kind of questions.
The first part is based on your risk tolerance (or rather your tolerance of various sorts of risks and how your particular circumstances influence those). How is your employment situation? How easy would it be to find a new job if you needed to? How is your health? Your family's health? Is there a foreseeable event outside of those that you think can happen in a few years? What is your cash flow like outside of work?
Answers to these questions should guide you on how liquid and how much risk you need and can take (or even if you need) an emergency fund. If you're just looking at traditional savings accounts then going for the one that has the highest interest with the least acceptable amount of hoops to jump through to accomplish should suit you just fine. You could also ladder the emergency fund through CD's if you have less need for having it all available at once. There are a couple of different methods and options out there.
Employment - great
Mine and family's health - great
New job ease - fairly good
Future "issues" - nothing foreseeable
Cash flow - covers more than 1/2 normal expenses - only debt is current house payment ~ $1,900/month for mortgage, taxes, and insurance (~$185,000 remaining at 2.85% for 13 more years - $80,000 equity)
So, I don't have a great need for $50k stashed close by under most people's standards. Laddering CDs plus a little in Barclay's will probably do me.
I do have a little unreasonable worry over $$, for many reasons, but a lot to do with the fact that I was very hungry for a few years after I graduated high school. That experience, plus my parent's tightness stick with me. That's why I have worked so hard to become FI, and more recently followed this forum. It helps with some of the insecurity I have over $$ (working to eliminate those issues). So, you can see that it is partly emotion, and I need to add that it is partly lack of knowledge. I would really feel more comfortable if I had a better understanding of investing, etc., as I have almost always done these things on my own.
On that last note, do you (or anyone else wishing to respond) have a good suggestion on reading material (books, etc.) that would provide a good overall understanding of investing. Most of what I read is very detailed about one subject, and if I am missing part of the big picture I get lost.