I Bonds are Treasury Bonds with inflation protection.
They can form a great supplementary emergency fund, especially now that they’re paying 9.62% through October 2022 (the rate adjusts every six months). Find more info from the Wall Street Journal: link.cpplan.com/ibondsWSJ
Why wouldn’t you put as much as you can into this government-backed investment?
The first limitation is amount: A single investor is limited to $10,000 in I Bonds per calendar year. You and your spouse can together invest $20k this year, which—while nice—is unlikely to form a large proportion of your retirement portfolio.
The second is liquidity: Your I Bonds are locked up for one year after purchase, with a modest penalty for liquidating before 5 years. That’s why we recommend having your emergency fund fully loaded before buying I Bonds with excess cash.
Last: how to buy. You can only buy them via the annoyingly outdated TreasuryDirect.gov website. The Wall Street Journal (June 29 issue) recently reported on the frustrations of some investors trying to buy I Bonds. When it works, it’s relatively quick; when it doesn’t work, the only way to get through may involve visiting an office in person to prove your identity.
Once you’ve decided if I Bonds are a good fit for your family, let us know what your experience is with buying them. We’d love to hear about your new supplemental emergency fund, and if you ran into any snags with the buying process.