Question - what is wrong with purchasing I bonds as a short term investment ? Nothing at all! I think I-bonds today make a great short term investment. Making a 3.5% return (that is exempt from state/local taxes) is not shabby compared to 1-year CDs. Plus, if you don't turn out to actually NEED to cash them in, you can hold them for longer if you wish, or cash them in for EE bonds if the situation warrants.I recently convinced a friend who had $20,000 saved up for a new car in one or two years to buy $20,000 worth of I-bonds. She'll get a good interest rate, and she managed to get 1% cash back, increasing her effective yield (credit card purchases will be terminated eventually, so don't count on this for the future).In short, I think I-bonds make a great 1-2 year investment.
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