Assuming VOO will get bailed out by US government in the event of a decline/stagnation within the timeframe of a few years, then I would go with $10k in VOO over $10k in I bonds every year due to the lower long term capital gains tax rate for VOO as opposed to paying regular income tax rates on interest income with I bonds.

Buying I Bonds is more about diversification, and / or having a liquid emergency fund that doesn't lose value to inflation (after the 1 year lock up).

Market funds are a very bad place to keep money that might be needed soon. Ibonds provide a safer place to keep funds you might need in an emergency. You should never have emergency funds in the market.

Also, assuming a government bailout will come to the rescue is a pretty risky strategy.

I bonds are also not for funds needed soon. I see some utility for them for funds that might be needed after 12 months, but before whenever one feels comfortable that public equity markets will be bailed out. They do sound like a good option for those that want to be prepared for emergencies 12 months into the future.

>Also, assuming a government bailout will come to the rescue is a pretty risky strategy.

Of course, this is just my opinion, but I feel like it is risky to not assume a government bailout. As far as I can see, the options are bailout of public markets, or revolution.

I’d really hope people are planning in advance for emergencies. It’s not an emergency if one knows it’s coming next month.

Everyone should have some emergency plan or fund if at all feasible.

You don't pay tax on I bonds if they are directed towards educational expenses for you or your child.

Compare this with a 529, which serves a similar purpose. Then this just reduces to a stocks vs. bonds argument, but for your kid's education. Do you value safety or STONKs then?

Also, I find changing beneficiaries for an I bond is easier than a 529, in the event whatever beneficiary doesn't pursue college (a decision I understand more these days), but IANAIA (I am not an investment advisor?)

Unlike a 529 plan, the tax benefit of using I-Bonds for tuition is only available if your AGI is under a certain amount in the year you cash them in (currently $154k for a married couple). https://www.investopedia.com/ask/answers/111414/what-educati...

You can rollover the I-Bonds to a 529 to bypass that AGI phaseout. https://www.savingforcollege.com/article/how-to-rollover-us-...

The same AGI phase-out applies in the year that you do the rollover.

So this doesn’t allow you to avoid the income phase-out, it just lets you time-shift the educational spending to an earlier year (in which your income may be below the threshold).

If your family income is above the threshold in every year until you need the money for tuition, then there will not be an opportunity to get the tax benefit.

From your link, emphasis mine:

> Taxpayers can bypass the income phase-outs on savings bonds by rolling them over into a 529 college savings plan before their income increases beyond the income phase-outs.

That is interesting, thanks for the info!

Also, I am not exactly sure what you mean by "STONKs", but if one's investment timeline is on the order of years, all the history I see shows broad market equity index funds to be pretty safe.

Keep in mind that you don't have to pay state income tax on iBond interest which is an advantage if you live in a state with a high income tax.