126 - Series I Bonds: My Inflation Protected Emergency Fund

Mental Models discussed in this podcast:

• Inflation
• Emergency Fund

Please review and rate the podcast

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. 

Follow me on Twitter and YouTube

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.