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    #16
    Originally posted by disneysteve View Post
    We have a big chunk of our EF in I bonds also. We've had them for years and are well past the 5-year point so if we need them, we can cash them out with no penalty at this point.
    And would have just eaten the penalty if you'd have needed the money early?

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      #17
      Originally posted by Nutria View Post
      And would have just eaten the penalty if you'd have needed the money early?
      If absolutely necessary. Would have tapped other funds first and only dipped into those if we exhausted other stuff.

      There was a time years ago when I was actually churning I bonds. The interest rate was great and the redemption policy was different so I was actually able to make a decent profit even with the penalty. Once they changed the policy, I had to stop doing that and just kept the ones I still owned.
      Steve

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        #18
        Steve how do you buy I Bonds. I am thinking of getting into them. I was told that years ago I should wait until the fix rate is higher.

        I typically just save cash when we know big ticket items are coming. Example we are starting a basement renovation. The contract says $50k, we're budgeting $75k. We also have to pay for the garage doors $3700 costco, cabinets $3250 laundry, $3000 family room, and $3000 mudroom. So I know about another $13k on top of our $50k estimate from contractor. I'm hoping to not run 10% over.

        Now we have that much cash on hand and we start October 2nd. Should we have "invested" the cash? Why bother. We also have our EF in different layers. We have 6 months in cash which covers most expenses that come up, then we have our taxable investments which is the rest of our money.

        When we had less money we invested everything. It never mattered we'd take the penalty because we were counting every penny that making even an extra $100 was worth the risk. Nowadays it's less stressful and easier to breathe just having extra cash. I could be investing more but it's a lot of work.
        LivingAlmostLarge Blog

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          #19
          Originally posted by LivingAlmostLarge View Post
          Steve how do you buy I Bonds.
          https://www.treasurydirect.gov/indiv...ibuy.htm#where
          Steve

          * Despite the high cost of living, it remains very popular.
          * Why should I pay for my daughter's education when she already knows everything?
          * There are no shortcuts to anywhere worth going.

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            #20
            Originally posted by LivingAlmostLarge View Post
            Steve how do you buy I Bonds. I am thinking of getting into them. I was told that years ago I should wait until the fix rate is higher.
            I wrestle with that argument (wait for a higher fixed rate!) all the time, and it has mostly kept me from buying more I-Bonds for the last 4-5 years... Which in retrospect, is silly. Even with their fixed rate at 0%, the inflation rate has mostly been pretty reasonable, and I-Bonds have earned between 1.5% to almost 3% over that time. The next closest thing to that is a 3-5 year CD, which could be argued is still not as good as the I-Bonds, because they get tax deferred earnings and have a relatively light 3-mo penalty before 5 yrs, then none at all. Plus, they'll always keep up with inflation, earning interest for up to 30 years.

            Long story short: if you're interested in I-Bonds and want a better place to keep non-immediate term cash savings, I-Bonds are a great option. And don't be like me... If they fit your needs, buy them now. You can only get $10k/yr per person, so if you have alot of money to sink into them, better to start sooner than later. If rates rise dramatically over the next couple years, you can always bust them open & buy new ones... Or just buy more at the higher rate.
            "Praestantia per minutus" ... "Acta non verba"

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              #21
              I thought I would point out this loophole that can be used at tax time that I learned about from the Bogleheads:
              Maximum purchase: $10,000 each calendar year for each Social Security Number. You may buy up to $10,000 in electronic I Bonds, and up to $5,000 in paper I Bonds bought with your IRS tax refund.

              How do you get a 5K refund if you are trying to keep the refund as close to zero as possible?

              One way is to make a quarterly tax payment in the last quarter so that you are due a refund. Then you get the refund in I bonds (up to 5K) when you do your taxes.

              Or, here is another way: https://thefinancebuff.com/backdoor-...ngs-bonds.html

              So, obviously you miss out on interest while you are waiting to get your taxes done (but, that is mitigated somewhat by using the technique described by the financebuff). Another down side is you have a bunch of paper bonds--they don't just issue 1 bond for 5k. (I've read it is 4 * $1,000 + 1 * $500 + 1* $200 + 6 * $50)

              Some folks deliberately go out of their way to get the paper bonds. But, if you don't want to try to track a bunch of paper bonds, you can always convert them on your treasury direct account.

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                #22
                I've been investing a lot of our taxable stuff.

                So we've got 9 months cash invested in stock market (mostly VTI), then about 16 months cash sitting in a checking account. But about half of that is going to a major home renovation in the next 3 months. We deliberately didn't put more down on the house because this was all planned for.

                That'll leave me with 8 months of cash in a checking account. I'm debating investing half of it say 4 months and leaving 4 months of cash. But 2 months of cash would be enough of a cushion for us to maybe invest 6 months into a staggered I-Bond? Or should we go aggressive and stock market?

                Right now I guess we'll sit tight until the renovations finish then sort our cash positions. It's too heavy cash and we've been heavy cash for almost 5 years but circumstances dictated we needed to be liquid.
                LivingAlmostLarge Blog

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                  #23
                  Originally posted by LivingAlmostLarge View Post
                  That'll leave me with 8 months of cash in a checking account. I'm debating investing half of it say 4 months and leaving 4 months of cash. But 2 months of cash would be enough of a cushion for us to maybe invest 6 months into a staggered I-Bond? Or should we go aggressive and stock market?
                  Aggressive with the bulk of your e-fund?

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                    #24
                    Just thinking not sure. I've always been very aggressive thinking that if we needed it then we'll cash it out. Somehow it's always worked. We just kept on living on the same budget and it worked out.

                    15 years ago we had a HELOC and used that as an EF. Every penny went to paying it down and if an emergency arose we would tap that. The with variable rate which was like 1% it was crazy easy to pay down the mortgage. Turned into a good thing.
                    LivingAlmostLarge Blog

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