I've been maxing out my annual $10k quota of these for the past few years. I'm targeting a 5% allocation of these eventually. The website is clunky but functional. Not sure how long it takes to get cash out as I've never needed to do that yet.
I had to redeem one a few months ago to drum up more cash for a down payment. Nothing to it.
A few things about I bonds:
- Cannot redeem in the first 12 months after purchase
- 3 months' interest forgone if you redeem within 5 years of purchase
- $10k limit per year per SSN. For power users, you can also purchase an additional amount up to $5k using your tax refund check if you're really that motivated.
- As noted above, the interest rate is not fixed but adjusted twice per year based upon recent measures of inflation.
- Interest is tax-deferred and not subject to state taxes upon redemption
- Even if deflation hits, you will not be penalized with negative interest rates
- Subject to income limitations, you can redeem for higher education payments tax-free
- I bonds will accrue interest for up to 30 years
Overall, I think they're a great option for those who (a) have some fixed income as part of their asset allocation and (b) have some taxable investments.