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Eli Broverman
President and Co-Founder
Betterment

TIPS on Inflation and Safe Investing

Eli Broverman

President and Co-Founder

Betterment

When it comes to low risk investments, its hard to improve upon treasuries, bonds that are fully backed by the U.S. Government. But TIPS, short for Treasury Inflation-Protected Securities, do one better in the safety department than normal treasuries because they also offer a hedge against inflation. The value of TIPS fluctuate in correlation with the Consumer

Originally published: December 18, 2009

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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About Betterment

Betterment is the largest independent online financial advisor with more than $10 billion in assets under management. The service is designed to help increase customers’ long-term returns and lower taxes for retirement planning, building wealth, and other financial goals. Betterment takes advanced investment strategies and uses technology to deliver them to more than 270,000 customers across its three business lines: direct-to-consumer, Betterment for Advisors, and Betterment for Business. Learn more.

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About the Author: Eli Broverman

Eli Broverman is the President and co-founder of Betterment. He graduated Brown University with a degree in Chemistry and holds a JD from New York University School of Law, and has a background in securities law.

You can contact Eli via email.

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