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A Historic Moment…

There was a certain feeling that lingered with me over the last 5 years, if not more. I know I wasn't the only one, from talking to my friends - young people, working, paying rent, going out, saving some money when they could. Everything seemed to be... overpriced.

Articles by Boris Khentov

By Boris Khentov
VP of Operations, Betterment  |  Published: April 13, 2009

This wasn’t about wanting to have it all, more than you can rightfully afford. There were those people too, as we know all too well, buying houses, cars and vacations almost entirely on credit. This was about the basic, mundane, day-to-day expenses. Was a studio apartment really “worth” $2,000 a month? Should a mixed drink cost $10? A cup of coffee $5?

Well, as it turned out, everything was overpriced. Now, even in NYC, supposedly impervious to the real estate climate of the nation, rents are being slashed. So-called “recession specials” are everywhere at your local restaurants and bars. Even Starbucks is trying to make its products seem affordable. And of course, arguably the biggest sale of them all, there is the stock market.

Three things are coinciding at this moment, which together, make the future bright for those for whom most of their earning and saving is still ahead of them. First, the stock market has come down off the bubble heights of the latest boom. Over the long term, nobody has doubts that it will recover. Those whose horizons are long can benefit the most from this dip. Second, it looks like Americans are finally saving. According to this CNN article, two years ago, Americans were spending $101 for every $100 they made, while today, they spend only $95, saving $5. Finally, a crop of young companies are banking on the increasing comfort Internet users feel with making financial transactions online, and offering their customers new ways to budget, plan and invest. Only a few years ago, such services were only available to those who could afford financial advisors and brokers. Now, those without large balances have access to powerful tools, run through simple, intuitive interfaces.

Ours is such a company. Betterment is doing something that’s never been done before. We are providing a way to invest your money in a single account, that combines the features of the familiar and simple savings account and a portfolio that harnesses the returns of the stock market. You can choose exactly the amount of risk that you are comfortable with: for example, you can allocate 50% of your balance to get savings account style returns, and 50% to own the entire stock market (through an index fund.) Betterment also allows you to share your allocation strategy with your friends, and conversely, see what your friends have chosen, and how it’s working out for them. Best of all, it’s all simple, simple, simple. Take a tour, see what we’re about.

This isn’t an easy time, and we’re not out of the woods yet. But, with no exceptions, there are always silver linings. Those who have the discipline to save and the foresight to know that this too, shall pass, see that before us is an opportunity to get in on the ground floor, to be a part of something new. At Betterment, we provide the tool – something that is logical, well-thought out, intuitive, secure, and works.

Happy saving!

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