I will set aside a minimum of $30,000 for an emergency fund. This will be in a savings account and serves as insurance to protect my investment. An example might if my roof needs to be replaced. If this happens, it could cost as much as $20,000 to repair the roof. If I took this out of my investment, I may have to pay a penalty, and I will generate less passive income. The emergency fund protects against such. If I had to use the Emergency Fund, then I can budget accordingly to rebuild the fund.