I agree with Ziggy.
Bucket one needs to look like cash, act like cash, and be accessible like cash. Most authors suggest things like MMF, fixed-term immediate annuities, bank accounts and, perhaps, very short-term bonds (controversial). Municipals don't pass the test for Bucket 1 in most of the stuff I have read.
Bucket 2 is where they traditionally would go.
San Francisco Area
ESR'd March 2010. FIRE'd January 2011.
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