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In fairness, aren't directly purchased iBonds better than cash?

Yes, I suppose so.
But their real yield is currently a nice fat zero. Better than TIPS which are negative, but not exactly an attractive investment.
And I gather the maximum investment is $10k/year, so it's not a solution for a large allocation.
And I hear they can be a nuisance to liquidate.

The return on cash isn't the interest.
The return on cash is what you get from having it ready (not a close substitute) when a good opportunity arises.
Such opportunities are like streetcars.
(a) there's always another one coming along.
(b) ...even though there are fewer of them than there used to be.
So, you can make a case for a lot of cash or a little cash, depending on how much you'd like to pounce on a good opportunity.

But I don't think you can make any case for a fixed income allocation at these rates.
"Return-free risk".

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