Founder & CEO
Timothy Baker, CFP® is the founder and CEO of WealthShape, an independent wealth management firm dedicated to fiduciary advice and evidence based investment management.
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 regularly appears 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
Both mutual funds and hedge fund are professionally managed investment vehicles, but there are a couple major differences. Just about any investor has access to mutual funds. They’re diversified, easy to buy and easy to sell. Hedge funds on the other hand are only open to accredited investors who have a net worth of at least a million dollars or an income of at least $200,000 over the last 2 years. Hedge funds often have lock up periods, where for a period of time you cannot get your money out of the fund due to their propriety trading methodology that often involves leveraging.
Although not always the case, hedge fund fees are usually much higher than that of mutual funds. The typical two and twenty fee represents the 2% fee on assets under management and the additional 20% of fund profits, which goes to the hedge fund.
Employers benefit in 4 primary ways:
- It allows them to attract new talent by offering employer matching contributions to a prospective employee’s retirement.
- It gives them a tax deduction for the contributions they make.
- Providing the plan remains in compliance with all required testing, it allows owners and other highly paid employees the opportunity to also defer funds for retirement.
- In some cases, matching contributions are not immediately vested, meaning the company gives them to you, but they don’t completely belong to you until you satisfy some period of time under continuous employment. Vesting schedules can encourage any employees who were considering a job change to reconsider or delay leaving, given the benefits they might be leaving on the table.
First, you should be commended for wanting to learn more about investing. I’m 100% for learning about capital markets, how they work and the principles of investing. While I won’t dissuade you from taking any of the aforementioned courses, I will make a few comments.
Day trading is a highly speculative endeavor that pits you against millions of other market participants seeking to profit from fundamental mispricing’s or technical analysis. In order to be successful you would have to believe that you knew something that millions of others didn’t. For arguments sake, lets suggest that you did. What are the chances that you will be able to act on that information prior to everyone else? News travels in milliseconds and even small mispricing’s can be arbitraged away very quickly.
I don’t have much advice for speculators largely due to the huge amounts of evidence suggesting you’re highly unlikely to outperform the market. Furthermore, even if you did, it would take years to determine whether your efforts were the result of skill or luck.
Lots of charts or data mining systems appear intuitive in hindsight. I tend to be skeptical of any company selling their methodology on becoming a profitable day trader. After all, if they truly had a formula that produced superior results, it would stand to reason that teaching it to others would only diminish its value because everyone would use it.
Happy St. Patty’s Day!
The conventional wisdom suggests as interest rates go up, bond prices go down. The issue is, we have no way of knowing how long interest rates will remain at current levels or more importantly, if the Federal Reserve’s actions will be give way to a more normal interest rate environment. If history is any indication of their ability to police interest rates, the chances aren’t good. Since 1980, we’ve seen 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 environment through their actions.
The questions are a bit more relevant to your time horizon for using the funds. Knowing that all these things are uncertain, the best ways to potentially insulate yourself for the long term is by maintaining a consistent strategy from the beginning. Bond mutual funds or ETFs that have durations longer than 5 or 10 years are likely to fluctuate more during rising interest rate environments. The same holds true with those that have credit ratings below investment grade. Fixed income is an important asset class to the majority of portfolios, in most cases, as a vehicle to insulate you from equity market risk, which historically should provide a higher expected rate of return. Therefore, I’m a bigger advocate of long term investors assuming risk where historically, they have been more rewarded for it, and not taking on too much interest rate and credit quality risk with the fixed income part of their portfolios.
The important particulars in reference to index oriented investing have most to do with the definition of the market and the thousands of ways in which you can own it. The question then becomes which ways make the most sense?
Owning a globally diversified portfolio including US markets, International Markets, Emerging Markets and Alternatives is logical. However, the amount of exposure to each will be a large determinant of future performance and volatility. Particulars like the amount of small cap vs. large cap, value vs. growth, fund expenses and the importance of rebalancing of your portfolio all come into play. Hope this helps.