The S&P 500 is down 21% since the beginning of the year.

But still up 40% from the post-Covid low.

For now

Muni bond and treasury ETFs are not down 21%, and neither is my emergency fund investment account.

Broad munis and intermediate treasuries are both down 10% YTD, and so are TIPS (though at least those have had inflation adjustments). You might want to check your "emergency fund investment account" lol...

It’s on target still. Less margin than usual, but the gains from the last 10 years have made up for that.

Betterment recommends 30% margin: https://www.betterment.com/resources/funding-a-safety-net-ca...

Gains from the past isn't so much the point, but rather when you may need to liquidate. An emergency fund is typically needed at the worst possible time, when the economy isn't good and investments are deflated. That's the liquidity risk you take with anything but cash.

"Stocks are liquid enough..."

Neither of those are stocks.

Bonds are (usually) less volatile than stocks, but yeah, be careful about using them for short-term emergency funds.

Bond ETFs are equally as liquid as stocks.

And will be back up in less than 18 months.

Hope springs eternal, but stimulus from the fed does not.

That sounds like a lot of work, with added risks.

With our system, our bills get paid with the money we have, and then when we make more money, it just goes back to the buffer account. Overflow goes into investing.

It's not something you need to justify to other people!

Stocks are the definition of not liquid, in that their implied duration is 10+ years at least. How many fools are using stocks as an emergency fund during a tightening cycle that's removing liquidity at the fastest pace since the 1980's?