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by halbritt 2881 days ago
Why is this getting downvoted? Current return on I-bonds is 2.52%, higher than any high-yield savings that I know of. It compounds semi-annually, tracks inflation, and there are no penalties for withdrawal. Seems perfect for an emergency fund and less hassle than a CD ladder. I'm not shilling an investment product, it's available direct from the US treasury:

https://www.treasurydirect.gov/indiv/research/indepth/ibonds...
2 comments
oplav 2881 days ago
It's not a bad idea. I've thought about migrating to I-Bonds. I've kept it in a savings account for the liquidity, but if you are okay with having a less liquid emergency fund, go for it.
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anarazel 2881 days ago
Because "emergency fund" and "illiquid for six months" aren't a great combination?
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halbritt 2880 days ago
Illiquid in the sense that it takes a few days to liquidate. One can always get back their original investment with no penalties.
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oplav 2879 days ago
Is that correct? According to the TreasuryDirect website, you can't redeem a bond within the first year. If a bond is less than 5 years old, you pay a 3 month interest penalty.

https://www.treasurydirect.gov/indiv/research/indepth/ibonds...

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halbritt 2879 days ago
That is correct. It's twelve months instead of six. I was mistaken. Generally speaking an emergency fund should be 3-6 months of income. I justified the illiquid period by moving a third of my fund into it at a time.

The interest "penalty" is simply not getting back the interest accrued in the prior three months.

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