Price Index to ensure returns always keep up with inflation. And while a TIPS principal will appreciate with inflation, TIPS also offer a measure deflation protection because the price at maturity is guaranteed to be at least equal to the original principal.
These advantages rank high among the variety of reasons that the Treasury Bond portion of Betterment Accounts is comprised of TIPS. For a full break down of TIPS, check out Phillip Moeller’s article in U.S. News.
And what exactly is the Consumer Price Index? The Consumer Price Index is just one of a multitude of ways to measure inflation, in this case by comparing prices for over 84,000 various goods and services ranging from gasoline and real estate to ham. 84,000 data points is awfully abstract, so check out this interactive graphic to help make sense of things.
Inflation Price Points — Reproduced from nytimes.com
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