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I am currently renting, and am thinking of buying a house in the next 5 years. I have no plan to buy in the immediate future, but it is near-term enough that I dont want to put it in the stock market. Currently I have this money in a savings account, yielding about 1.71%. I am thinking of putting it in an I-bond, which from what I understand, would yield about 4% right now--though it would be somewhat less due to the interest penalty depending on when I withdraw it.( i realize i wouldnt be able to touch it for a year).

any reason not to do this? other suggestions? I dont want to ladder CD's, since when I need to use this money, I will want to use it all at once.

I would still keep money for an e-fund in a savings account.

thanks for any input.
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