A rule of thumb in the financial planning industry is 3 to 6 months worth of living expenses. The purpose of an emergency fund is to have funds readily available in the event you find yourself unemployed, your car breaks down, you need an airline ticket to attend the funeral of a loved one, etc. Because these funds need to be readily available, I do not recommend you invest these funds in anything but a money market or regular savings/checking account. If you invest the funds in stocks and bonds and they happen to go down right when you need the funds, you will be forced to sell the investment in an untimely fashion or, come up with the funds from another source (consumer debt?). I do not even recommend investing these 
funds in a 3 month CD because the funds are not immediately available to you as required.