Why an emergency fund?

An emergency fund is absolutely essential. It may take several years to build (my time horizon is 2 years) but the best part is...once you build it once, you never need to build it again. That money can sit in your savings account (earning interest) for your entire professional career where you will hopefully never have to touch it. But, if you ever need it...it is there.

Recession causes you to lose your job? Hunt patiently for the right job because you aren't taking on extra debt during your unemployment, you are drawing from your emergency fund. Car needs immediate work? Tap the fund. You are prepared for things that would send many into debt. You are prepared for what may worry many people. Your answer: "I made a few short term sacrifices for the long term security of being able to say: "Its not a problem" in the future"

My emergency fund had recently been defined as "money that I can easily get my hands on in an emergency." I had previously thought that I could simply margin out my investment accounts at 10.5% interest and repay the funds once my emergency fund was over.

Raising funds via margining an investment account is a pretty simple concept. Basically, if you hold $10,000 worth of stocks, bonds, etc…your brokerage firm will allow you to take out a certain amount of cash based on their margin requirement. (Say 50%) You can borrow up to that amount in cash, in this case $5,000 ($50% of $10,000) at a specified interest rate (usually around 10.5%. The issue is whether or not your investments continue to grow in value. If the investment grows, you can borrow money, if the investment lessens in value, you can actually end up owing money to the brokerage. If your $10,000 investment decreased to $9,000 in value, you are only allowed to borrow $4,500. If you had already borrowed $5,000, you would have to pay back the owed amount (this is called a margin call) or the brokerage will sell some of the stocks, bonds, etc…that you own. The reason that the brokerage does this is because the can.
1) Receive a good interest rate on the loan
2) They hold your investments as collateral on the loan until you can pay them back.

The problem with this was pretty simple: "What if there was a recession and my margin ability was not sufficient?" What if I wanted to margin my account to put a down payment on a house? What I needed those funds for any reason?I'm young, most of my money should be in stocks...simply put, I can afford to take more risks than a 70 year old retiree...but everyone should have some cash sitting around for a rainy day...everyone! My definition of my emergency fund changed. That's the best part about definitions and ideas...they can easily change once a new level of understanding is met.

The endgame for me is pretty simple.
1) 3 months of expenses in cash savings in 3 separate accounts. (Available in less than 3 business days. IMMEDIATE GOAL!!!)
2) 3 months of expenses in a taxable account that pays a dividend that is equal/comparable to the interest rate in my savings account (this money is considered less available, but I would be able to continue collecting interest via dividends while also taking advantage of the stock market in general. Basically, there will be one single stock in my taxable investment account that I will invest money in for my savings. I will not use this money for anything but an emergency fund. (Longer term goal.)
3) 1 month of expenses in COLD HARD CASH. (In my safe where it is immediately available. Endgame!)

I'm contemplating taking some money out of my long term investments to fund my emergency fund but I'm hesitant because I want my emergency fund to be something that I work for because it is important...not something that I can solve with a few clicks to initialize an account transfer.

Edit: I added a description for what margining an account is. There were a few questions about what this was and how it was done.