All savings are an investment. If you put money into a passbook savings account you get a horrible return on your savings. If you put your money into blue-chip mutual funds or high-quality real estate you get a better return.
Remember, if your savings aren't invested at a rate of return higher than inflation, you're not saving money - you're just slowly spending it on nothing.
You don't sell your house to buy groceries when you lose your job.
What a mildly intelligent person does is what I did when I left my last job. I have a substantial amount of equity in my home and I also have a significant amount of tax-sheltered savings in 401(k) and IRA accounts.
What I did was have a home equity borrowing line on my house which I had never used.
I locked the loan in at a low rate.
So when I left my job, I had full access to my home equity through the loan. So if I had needed to buy groceries, I could have spent a couple of hundred bucks of my home equity without selling my house.
It's pretty simple, and I found a new job three weeks later, so I never had to use it.
I'll point out that the usual savings vehicles that most people have - 401(k) plans, IRAs, and CDs etc. have substantial withdrawal penalties if you need to dip into them for groceries.
While I agree that no responsible person does not keep immediate cash around, I disagree that home equity is not savings and is not accessible.
My point is simply that when it comes to "being prepared", 401 is not the vehicle for that. "Savings", in terms of being prepared for emergency or hard times, is not about getting a good return. That's what investments are about: putting money at risk in exchange for expected reward. Saving for emergency is about sheltering money from risk so that it will definitely be available for emergency. I have plenty in 401k and I dont consider ANY of it savings.