We used to let our emergency funds held in HYSA ebb and flow as expenses and cashflow needs dictated over the years. Both DW & I have had steady employment and strong income. This let us consistently invest into our taxable brokerage account every pay period, which currently approximates $1.2M of our $4.0M portfolio; approximately 25x expenses at ages 48/47. Most recent portfolio review for reference is linked to HERE.
Since opening accounts at TreasuryDirect to purchase I-Bonds in 2022, I’ve treated that cash as something more than cash, more like cash+ funds that were nearly sacrosanct to spend from due to their “scarcity”.
Our current holdings of I-Bonds amount to ~$120K. In the last couple of months our brokerage contributions came to a halt as I dipped into our liquid cash to fund $20K of cash in our Vanguard MMF to fund another year’s worth of Gift Box I-Bond purchases in April in order to lock in the 1.30% fixed rate. Sine April I've been trying to rebuild cash our cash position in the MMF despite holding $120K at TreasuryDirect. This did not hurt our portfolio given market volatility in recent weeks, but nonetheless I recognize my mindset has shifted to preserving I-Bonds instead of ensuring steady contributions to VTSAX in our brokerage account. This has extended to me structuring overpayment of quarterly estimates taxes to ensure we can claim $5K of a tax refund in I-Bonds
We did cash-in ~$20K of I-Bonds last year to pay for DW’s car in cash, but otherwise I have preferenced investing $25K per year into I-Bonds to serve as a sinking fund against our 2.375% mortgage, and cash needs for projected FIRE when we are 50-55 (to manage taxable income, pay for Roth conversions, etc.). Mortgage balance is <$140K and scheduled to be paid-off in 6-years.
The difficulties other have experienced with TreasuryDirect, especially during the loss of a loved one, or simply having their account locked out is what initially kept me away until 2022; I finally succumbed to 7.12% nominal returns that were available that spring. I jumped in head first funding multiple years in our gift boxes and buying $5K each year from tax returns.
By February 2025 I’ll be able to move $80K of the $120K way from TreasuryDirect which I believe I am inclined to do in order to eliminate the risk of us or our heirs being able to timely access these funds. We will have to surrender the 3-month interest penalty since these funds have been invested <5-years.
What I would aim to accomplish from this is to consolidate our holdings and move away from TreasuryDirect completely by January 2027 (…if not sooner based on what I have read in the I-Bond Mega Thread), and make sure I am not over saving in cash and equivalents. I have not determined if we would go back to a HYSA, CDs, MMF, Muni’s, short term bonds, or a combination of all of the above given our current portfolio.
Is this well-reasoned or am I compounding a previous behavioral mistake with a new one at this time?
Since opening accounts at TreasuryDirect to purchase I-Bonds in 2022, I’ve treated that cash as something more than cash, more like cash+ funds that were nearly sacrosanct to spend from due to their “scarcity”.
Our current holdings of I-Bonds amount to ~$120K. In the last couple of months our brokerage contributions came to a halt as I dipped into our liquid cash to fund $20K of cash in our Vanguard MMF to fund another year’s worth of Gift Box I-Bond purchases in April in order to lock in the 1.30% fixed rate. Sine April I've been trying to rebuild cash our cash position in the MMF despite holding $120K at TreasuryDirect. This did not hurt our portfolio given market volatility in recent weeks, but nonetheless I recognize my mindset has shifted to preserving I-Bonds instead of ensuring steady contributions to VTSAX in our brokerage account. This has extended to me structuring overpayment of quarterly estimates taxes to ensure we can claim $5K of a tax refund in I-Bonds
We did cash-in ~$20K of I-Bonds last year to pay for DW’s car in cash, but otherwise I have preferenced investing $25K per year into I-Bonds to serve as a sinking fund against our 2.375% mortgage, and cash needs for projected FIRE when we are 50-55 (to manage taxable income, pay for Roth conversions, etc.). Mortgage balance is <$140K and scheduled to be paid-off in 6-years.
The difficulties other have experienced with TreasuryDirect, especially during the loss of a loved one, or simply having their account locked out is what initially kept me away until 2022; I finally succumbed to 7.12% nominal returns that were available that spring. I jumped in head first funding multiple years in our gift boxes and buying $5K each year from tax returns.
By February 2025 I’ll be able to move $80K of the $120K way from TreasuryDirect which I believe I am inclined to do in order to eliminate the risk of us or our heirs being able to timely access these funds. We will have to surrender the 3-month interest penalty since these funds have been invested <5-years.
What I would aim to accomplish from this is to consolidate our holdings and move away from TreasuryDirect completely by January 2027 (…if not sooner based on what I have read in the I-Bond Mega Thread), and make sure I am not over saving in cash and equivalents. I have not determined if we would go back to a HYSA, CDs, MMF, Muni’s, short term bonds, or a combination of all of the above given our current portfolio.
Is this well-reasoned or am I compounding a previous behavioral mistake with a new one at this time?
Statistics: Posted by PA_Boglehead — Sun Aug 11, 2024 6:54 pm — Replies 8 — Views 1397