Optimal strategy for purchasing state savings bonds?

noelÓm

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I am thinking of putting some money into state savings bonds to act as an emergency cash pile. I'm aware that I would lose out on some interest payments if I was to withdraw my money earlier than the full term. My question is whether there is an optimal way of investing that gives me the flexibility to withdraw funds at the lowest possible cost?

Say I invest €25,000 in a 3-year bond, but withdraw €10,000 before the 3 years are up. Do I suffer the encashment penalty only on the €10,000 I withdrew or on the full €25,000? Would it make more sense to make five individual investments of €5,000 instead and give myself more flexibility? Perhaps I'm overthinking this, but I can't find a clear answer online.
 
If you have a look at the early repayment form online you will see that there is an option for partial repayment. Presumably the part that is not repaid continues unaffected, there is no question regarding how it is to be reinvested.
 
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