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126 - Series I Bonds: My Inflation Protected Emergency Fund

The DIY Investing Podcast

Release Date: 01/30/2022

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More Episodes

Mental Models discussed in this podcast:

  • Inflation
  • Emergency Fund

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If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience. 

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Twitter Handle: @TreyHenninger

YouTube Channel: DIY Investing

Support the Podcast on Patreon

This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron.

Show Outline

The full show notes for this episode are available at https://www.diyinvesting.org/Episode126

Series I Bonds

  • Current Yield: 7.12% (through April 2022)
  • Re-rates every 6 months according to an inflation index (not sure which one)
  • Combination of a fixed rate (currently 0%) and a variable interest rate. 
  • Maximum of $10k/year per person. 
    • On a calendary year basis.
  • Available for purchase on TreasuryDirect.gov

Emergency Fund

  • Need Liquidity
  • Principal protection
  • Normally lacks inflation protection (nice to have, not a need)
  • My plan:
    • 50% savings account
    • 50% Series I Bonds
  • Take a few years to move into the I Bonds slowly to limit liquidity risks
  • Normal recommendation is 3-6 months of expenses. I like 12 months as a long-term goal. 

 

Summary:

Series I Bonds are an inflation protected security issued by the United States Government to individual US Citizens. These non-marketable securities offer interest rates comparable to inflation and are an ideal asset to include in an emergency fund.