Jan 30, 2022
Mental Models discussed in this podcast:
- Inflation
- Emergency Fund
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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.