Quote:
|
Originally Posted by jmjj215
So if you want to avoid the penalty you have to hold it longer than 5 years, but if you don't mind paying the last 3 months of interest back, you cash out later than one year but sooner than 5?
|
Exactly. And if your denominations are small, that loss might not be as much as you think. Matter of fact, the suggestion is to carefully watch the fixed rate piece of your holdings. If that's going up (as it is), it would be worth redeeming the low fixed rate bonds, take the 3 month interest hit, and buy more of the higher fixed rate bonds.
Notice that I didn't suggest that you put everything from your emergency fund into it - if you think of your savings as a layer cake, the ING account is the frosting and the first layer. This is your second layer that you can use for college or down payment on a house or the hurricane fund (as opposed to the rainy day fund). Your third layer is supposed to be your 401k, stock, IRA, etc.