Founder & CEO
Timothy Baker, CFP® is the founder and CEO of WealthShape, an independent advisory firm built on innovation, responsibility and the real world application of research.
He spent over a decade developing a new client investment experience to specifically address the major problems facing today's financial services industry.
Throughout his career he’s held positions as an advisor, consultant, portfolio manager, and vice president for institutional money management firms with billions of dollars in assets under management. These experiences led to a new way of thinking about personal finance based on a combination of three critical elements: digital age financial planning, low cost factor-based investment management and fiduciary advice delivered by CFP® professionals.
WealthShape works with clients in Connecticut and throughout the country to deliver evidence based investment solutions and high quality advice at a low cost. Clients receive access to all investments, goals and progress in one easy to understand, secure location. The company operates under the belief that financial planning shouldn’t be static but rather vibrant and ongoing all while upholding the highest level of fiduciary responsibility.
Tim’s appeared numerous times as a guest on SiriusXM Business Radio and frequently contributes to media outlets including Investopedia, The Wall Street Journal, Investment News, US News & World Report, Financial Advisor IQ and AdvisorHUB. He holds a MBA with a concentration in Finance, is a CERTIFIED FINANCIAL PLANNER™ professional and an active member of the National Association of Personal Financial Advisors (NAPFA). He guest lecturers on personal finance via electronic media and at various locations throughout the northeast U.S. including his home state of Connecticut where he resides with his wife Danielle and their daughter Ripley.
BS, Business Administration, Southern Connecticut State University
MBA, Southern Connecticut State University
WealthShape, LLC provides this communication as a matter of general information. No one should assume that any discussion or information contained in this material serves as a receipt of, or as a substitute for, personalized investment, tax or legal advice.
Advice and Investment Design Should Rely on Reason. Not Speculation.
Timothy Baker CFP® Advisor Insights
I would caution against making any change for the reasons of speculation on what could, or could not, take place. If the target date 2025 is right for you from a long-term asset allocation perspective today, there’s no reason to suggest it should change. As we speak, markets are adjusting to the collective interpretations of millions of investors. We have to assume that current market prices are good estimates of underlying value because these sentiments are being absorbed into prices.
My recent Investopedia article: Democrats, Republicans and Your Investment Portfolio
Timing the market, even with slight adjustments, can have significant long term impacts on your portfolio. Research has shown that discipline is a far better ally to long term investors.
Hope this helps.
The biggest changes that you are going to see are generally going to be advantages no matter when these events take place.
The first item is your tax filing status. Once you’re married, your filing status will likely change from single to married filing jointly or married filing separately. Usually the married filing jointly status becomes the most advantageous due to the combined incomes and some credits and deductions not available otherwise.
The tax implications on the purchase of your first home are going to be more of a longer term item. Assuming you will be taking out a mortgage to help pay for your home, you will likely be able to deduct the mortgage interest on the loan providing you itemize deductions on your tax return. The interest on your mortgage will be tax deductible in for the length of the loan.
Congratulations! These are two huge steps. The question of whether it is easier to do in separate years often has more to do with the stress of the changes. There may be some ancillary items such as the deductibility of student loan interest or eligibility for certain income based programs, but these are the main changes to familiarize yourselves with.
Hope this helps. Best of luck to both of you!
Historically, one of the best portfolio defenses against rising inflation has been consistent exposure to stocks, which over time have outpaced inflation. Another well know vehicle for fixed income investors would be Treasury inflation protected securities or TIPS, which are indexed to inflation thereby protecting your portfolio from rising rates.
While gold and other commodities may offer a hedge against inflation, the long term expected return simply isn’t there when compared to equity markets. If you own a well-diversified portfolio, you already have indirect exposure to gold through the underlying stocks, mutual funds, or ETF’s that you own.
This is a difficult question to answer given the large number of variables that always come into play. I’ll do my best to comment from a high level perspective.
The US Dollar
When the US dollar is strong relative to other currencies, it means consumers can buy more international goods for less dollars. The downside is US companies that sell goods to foreign countries, in turn, earn less. When the dollar is weak, it simply means it buys less foreign goods or services, but also makes exporting them more attractive.
Conventional wisdom says that when the Fed tightens the monetary policy, spending is restricted and inflation slows. Conversely, a loose monetary policy is supposed to encourage growth. They have numerous methods to influence these environments. However, since 1980 we’ve seen interest rates ranging from the highs of 20% to lows of .5%. Given that large level of fluctuation, it’s hard to argue that they have the ability to hold sway over a normal inflationary environment through their actions.
According to the tax foundation, the US has the third highest marginal corporate income tax rate in the world at around 39%. That number is pretty much unchanged between 2015 and 2016. In 2015, US large companies collectively had a positive 1.4% rate of return for the S&P 500. Thus far, through 9/30 of 2016, the S&P 500 stands at a positive 7.84% for the year.
All that being said: If you subscribe to a transparent open and competitive market landscape, then you believe that a company’s first fiscal responsibility is to remain profitable and act in the best interest of its shareholders. The US equity market is by far the largest, accounting for approximately 52% of all global equity markets. Due to an ever expanding global workforce, domestic fiscal policies have arguably become less impactful to the domiciled company. The competitive environment is global and residual affects are often felt by domestic workforces. Ultimately, the evidence is inconclusive at best as to whether or not US fiscal or monetary policy has a lasting impact on financial performance.
Your participation in the 401(k) plan for that year makes you an active participant and therefore by IRS rules, you may not be eligible to claim a deduction for a “Traditional IRA” contribution depending on your compensation level. Once you become an active participant, you unfortunately retain that status for the year.
The income limitations change from year to year and your wife’s active participation status is also important. The IRA contribution would be deductible if both husband and wife were active participants who elect to file taxes jointly, and make under $98K in 2016.