Opinions needed! I have about a 6 month expenses emergency fund. But I am still putting away some money and in the next 6 months to a year, I will get some cash influx. My goal is an emergency fund of one year expenses. But it seems crazy to have all of it earning virtuallly no interest in a savings account. I want it reasonably safe. I already max out my IRA contribution and I want to keep the money liquid anyway. Thinking of investing in tax free municipal bonds with Vanguard. Investments are mostly A to AAA bonds, expense is low and the income is tax exempt. Paying around 5% interest. I have no debt, I live a minimalist lifestyle with joy, and I have life insurance and disability insurance. All on-line calculators say I am doing pretty well for my planned minimalist retirement in approximately 20 years. I don't currently have a mortgage as I rent, but I am hoping to buy a house with a mortgage in the next 6 months if I find the right house. As soon as I secure the one year emergency fund and enough to replace my car (I also save money in a car fund), I might start paying down the mortgage, but at this time it appears that I can get a very low interest rate on the loan, so I may forgo that and keep putting money in bonds.
I know this is not the DR thing, but I haven't had issues with debt or spending in at least 15 years. I also invest in my education and training in various fields so as to create some resiliency in income production. And I regularly invest in my household so as to reduce future expenses. As soon as I buy my house, extra money will go into things such as insulation, energy saving items, etc.
Anyway, are there negatives about bond funds? Will my money be accessible if I should anticipate needing it with 5 or 6 months advance notice. Any suggestions?