Posted: 5/18/2026 7:22:08 PM EDT
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The current rate is .9% fixed +3.34% inflation rate. Would it make sense to move up to $10k in T-bills into iBonds? I have the T-bills as part of my emergency fund. The main part is held in a HYSA for quick access and would easily last me 6 months if needed. The T-bills are held at Treasury Direct, if it matters. Thanks all! |
Who, What, Where? Call Sign, Snowball
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Originally Posted By Saker13: The current rate is .9% fixed +3.34% inflation rate. Would it make sense to move up to $10k in T-bills into iBonds? I have the T-bills as part of my emergency fund. The main part is held in a HYSA for quick access and would easily last me 6 months if needed. The T-bills are held at Treasury Direct, if it matters. Thanks all! Are you expecting rising inflation soon? Do you have anything else that serves as an inflation hedge, like gold, silver, and that imperfect inflation hedge Bitcoin? If you answer yes to rising inflation and no to gold, silver and Bitcoin, then you might want to consider I-Bonds. In a couple of years when my I-Bonds start maturing I will be facing the same decision. I’ve got some that pay 3.6% + inflation. None are below 3%. We won’t see those again. |
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Originally Posted By grendelbane: Are you expecting rising inflation soon? Do you have anything else that serves as an inflation hedge, like gold, silver, and that imperfect inflation hedge Bitcoin? If you answer yes to rising inflation and no to gold, silver and Bitcoin, then you might want to consider I-Bonds. In a couple of years when my I-Bonds start maturing I will be facing the same decision. I've got some that pay 3.6% + inflation. None are below 3%. We won't see those again. 401k is good, Roth IRA started recently and will be fully funded by YE, Brokerage account is small but good. Have some old RSUs that I am selling as I can (I'm classified as an insider so lockout periods hurt me here) for tax loss harvesting and using to fund the Roth. I am no where near a high wealth investor. Think low 6 figure income with a max of $750k net worth. Edit - in my 50's... |
Who, What, Where? Call Sign, Snowball
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I got a few I bonds when my mom died…. She made them payable on death to me when she bought them in the mid-2000s. After 20 years they had doubled in value. In that same time the sp500 was 6x. Unless you buy when the fixed rate is sky high and hold them into a subsequent low rate period they barely beat inflation. If you’re more than a decade from retiring I would not even consider such a low return investment. |
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Originally Posted By Morgan321: Unless you buy when the fixed rate is sky high and hold them into a subsequent low rate period they barely beat inflation. If you’re more than a decade from retiring I would not even consider such a low return investment. Barely beating inflation is actually good performance for an emergency fund type product. One shouldn’t have too large an emergency fund, but having some is prudent. Prevents one from having to sell high performance assets during a bear market. From the last years of the 20th century until they start maturing in a few years there have been more than a few rough spots. Knowing I had I-Bonds helped me to stay calm. Of course, as you point out, I bought them when the fixed rate was sky high, also bought them with a credit card on the last day of the month, plan redeeming them on the first day of the month, boosting return slightly. Can’t do the credit card any more though. |
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Originally Posted By grendelbane: Barely beating inflation is actually good performance for an emergency fund type product. .............. Of course, as you point out, I bought them when the fixed rate was sky high, ........ The golden era of I bonds ended after the dot-com crunch when ultra-low fed rates became the norm and the fixed I bond rate fell to effectively zero. Given the current fiscal environment there is little to no chance that the fixed I bond rate will increase appreciably. I would (and do) simply buy treasury bills or treasury ETFs so that they are visible in whatever brokerage service I use for everything else. Today's rate for a new I bond works out to be 4.2% while very short term treasuries are paying 3.6%. That's a $300 difference over one year on a $50k emergency fund - not worth the hassle of dealing with an added treasury account and separate pots of money in my opinion. |
| Just a thought but aren’t instruments held through treasury direct a PITA to liquidate before maturity? Might not be the best place to keep emergency money as stated in the OP. I know the times I’ve bought TBills I always did it through my brokerage so I could sell if need be with a few clicks in my phone. |
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Originally Posted By Morgan321: They barely beat the official inflation numbers, but we all know the official inflation numbers are not representative of the real world. OP didn't say emergency fund, but they are reasonable for that use. Might want to reread his post, he was definitely referring to an emergency fund. Which is about the only place they make sense. They aren’t the only choice, but they are a good one. One disadvantage is you get to pay taxes on both the fixed rate portion and the inflation adjustment. But that is true for most everything. OP indicated that he also had a HYSA and T-Bills. I see no problem with buying I-Bonds when some of the T-Bills mature. |
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I played with grok a little bit comparing I-Bond returns to 3 month T-Bills. Every period I tried I-Bonds performed best. Even for 10 years when the fixed rate component was 0.1%. Another advantage is that T-Bills are taxed annually, while taxes on I-bonds are due at redemption. Not a huge difference, but your emergency fund grows a bit with time, and you might be able to time it so you pay taxes during a low income year. Considering OP has a HYSA Account also, and already has a Treasury Direct account, I like his idea. The fixed rate part might be even better in a year. |
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Originally Posted By grendelbane: Might want to reread his post, he was definitely referring to an emergency fund. Which is about the only place they make sense. They aren't the only choice, but they are a good one. One disadvantage is you get to pay taxes on both the fixed rate portion and the inflation adjustment. But that is true for most everything. OP indicated that he also had a HYSA and T-Bills. I see no problem with buying I-Bonds when some of the T-Bills mature. |
Who, What, Where? Call Sign, Snowball
Moderate-Length Barrel Evangelist
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Originally Posted By grendelbane: Another advantage is that T-Bills are taxed annually, while taxes on I-bonds are due at redemption. Not a huge difference, but your emergency fund grows a bit with time, and you might be able to time it so you pay taxes during a low income year. |
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Originally Posted By 1168RGR: If using them as unemployment insurance, paying the taxes on a low income year seems like the most likely scenario. I keep an unemployment fund, so maybe I should look into these. Originally Posted By 1168RGR: Originally Posted By grendelbane: Another advantage is that T-Bills are taxed annually, while taxes on I-bonds are due at redemption. I believe paper bonds are only available these days if you purchase using your tax refund when you file. If you lose a paper bond they can be replaced if you have the basic info about the bonds (Bond #, etc). I can envision situations where an interest earning paper investment who's existence is not publicly available could be useful. I don't know if electronic bonds purchased via a treasury account withhold taxes when they are cashed in. |
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Originally Posted By Morgan321: I believe paper bonds are only available these days if you purchase using your tax refund when you file. If you lose a paper bond they can be replaced if you have the basic info about the bonds (Bond #, etc). I can envision situations where an interest earning paper investment whose existence is not publicly available could be useful. I believe no paper I-Bonds are being issued now, not even by refund. Which is a shame. Seems almost as if Treasury doesn’t want to sell as many. |
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Originally Posted By grendelbane: I believe no paper I-Bonds are being issued now, not even by refund. Which is a shame. Seems almost as if Treasury doesn’t want to sell as many. Originally Posted By grendelbane: I believe no paper I-Bonds are being issued now, not even by refund. Which is a shame. Seems almost as if Treasury doesn’t want to sell as many. As of January 1, 2025, you are no longer able to buy paper Series I savings bonds with your tax refund. |
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Did them for a few years for my parents. In the end, IMO, the juice isn't worth the squeeze. Yes you can earn a bit more on the TIPS type bonds. BUT, you have to deal with the FEDGOV and their website and rules. When dad passed they weren't set up for an easy redemption. Many hoops and a six month window for them to pay out. I still recall being on hold for hours trying to get some guidance on the process. |
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Originally Posted By VegasEggus: I still recall being on hold for hours trying to get some guidance on the process. There is something to be said for the old school paper bonds. I also think non-marketable bonds are the devil’s invention. Even in that rare case where they benefit the purchaser. Which I-Bonds typically do, at least compared to the other non-marketable bonds. The paper E, EE and I-bonds were all subsidized by the banks. At least that is slowly going away. |