Patrick

­

About Patrick Eng

This author has not yet filled in any details.
So far Patrick Eng has created 33 blog entries.

Financial Planning Goes Beyond Numbers

Financial Planning Goes Beyond NumbersDuring my 20-year career as an advisor, I have learned that so much of helping clients with financial planning goes beyond numbers.

Early on, I thought this business focused primarily on spreadsheets, trading, portfolio performance and understanding the global economy. Those things do play an important part in my day-to-day work, though they are not the only things to consider. Beyond that is my role of supporting, guiding and encouraging clients during trying times.

The Perspective team, for example, has helped our clients and their families through many difficult events – from divorce, substance abuse or death of a loved one, to recession, credit card debt or loss of a job. These difficult times teach us things we can’t always appreciate while we’re going through them. Yet, upon later reflection, we can grow to appreciate those lessons.

In my own life, my economic knowledge and self-composure were tested during the Great Recession of 2008. I was several years into a huge career and life change – transitioning from trading derivatives in New York City in 2000 to advising financial planning clients in Phoenix. The volatile global markets, my client’s portfolios and my family’s wellbeing weighed heavy on my mind. Those were dark days.

I am fortunate to have had Kristin, my supportive and encouraging wife, at my side. It was a tough trial for me to build a new business in an unfamiliar place. Kristin was my cheerleader. She believed in me, even when I did not. Her support and encouragement has helped guide me during my most difficult times.

Through Kristin’s example, as well as self-reflection, I’ve learned how to provide that same support and encouragement as an advisor.

Each of us at Perspective has a similar story. Collectively, we stand ready to provide support, guidance and encouragement through any trial. We draw upon each other’s experiences and strengths to go beyond numbers and look after the many needs of all our clients.

By |March 11th, 2019|Financial Planning|

Maintaining Perspective

Patrick Eng addresses maintaining perspective.When the Dow Jones Industrial Average climbed above 22,000 in August 2017 (an all-time high) I wrote an article titled “Managing Expectations.” In early October 2018, the Dow reached a record-breaking 26,800 points. In the four weeks that followed, it dropped by 2,000 points. By mid-November, the it was back near 26,000. As I write today, and the Dow is hovering at roughly 25,000, the new mantra is “maintaining perspective.”

After seeing these numbers, I felt compelled to share once again the points from my summer 2017 article. As we traverse the landscape of volatile financial markets – experiencing both the euphoric highs and the inevitable declines – it’s important to remember the following:

  • Stay diversified; even if it doesn’t feel right, history shows this strategy works.
  • Avoid jumping in and out of the market; it is virtually impossible to time market movement.
  • Invest regularly, in both good times and in bad times; the potential to buy investments at discount prices can only happen if you are involved when things look the bleakest.
  • Market corrections, no matter how painful, are a natural part of the economic cycle.

These long-term fundamental principles of investing will serve you well and set you up for long-term investment success. It also helps to stay in communication with your advisor as changes take place in your life or if you just want to get some perspective on market movement.  An important role we play in our clients’ lives is being an “emotional surge protector” when unavoidable declines take place.

By |November 19th, 2018|Current Affairs, Investing, Uncategorized|

Exponential Growth of ETFs

Patrick Eng addresses the exponential growth of ETFs.

The advent of Exchange Traded Funds (ETFs) took place a little more than 25 years ago with the creation of the SPDR S&P 500 Trust (SPY) in January 1993.  Yet, ETFs remained an obscure and little noticed trading vehicle for many years before it was embraced as a widely accepted investment choice by retail investors. An emphasis on passive investing and low-cost investment products in the past 10 years has driven the exponential growth of ETFs.

In the early 2000s, there was less than $100 billion in assets under management in ETF form. Today, that figure approaches $5 trillion. By comparison, the mutual fund industry now has about $19 trillion in assets, according to Investment Company Institute.

ETFs trade like stocks and are primarily passive investments that endeavor to replicate the performance of an index. In the case of the SPY, it is the S&P 500 index with 500 stocks bundled into a trust that trades on the exchange as if it was just one stock. ETFs are generally more tax-efficient than stocks, because they tend not to distribute a lot of capital gains and passive tracking of an index usually doesn’t require frequent trading.

There is plenty of room for the ETF market to continue to grow. In fact, ETFs have eclipsed the hedge fund market, which grew to $3.22 trillion globally in 2018, according to a report by Hedge Fund Research. Projections by BlackRock estimate ETF assets will grow to $12 trillion in the next five years.

As a potential investor in ETFs, knowing what resources you currently have and what resources you still need to reach a specific financial planning goal is critical. Picking the investment product that will help you reach that goal is the last step in the process – a step with which your advisor can assist.

Along with mutual funds and hedge funds, ETFs are investment vehicles that may help you get where you want to go.

By |August 27th, 2018|Investing|

Understanding RMDs

Patrick Eng writes about the importance of understanding RMDs.When investors with retirement accounts turn 70 ½ years old, they should be aware of the required minimum distribution (RMD) rules regarding the type of retirement accounts they possess. Understanding RMDs will help you avoid high penalties from the IRS. Here are some things to keep in mind.

The IRS requires that account holders of traditional IRA, SEP IRA, Simple IRA and company-defined contribution plans [401(k), 403(b) and 457] withdraw a certain minimum amount from their accounts each year. (Roth IRAs do not have an RMD.) If you continue working past 70 ½ years, many defined contribution plans will allow you to put off taking the RMD until you retire; but for all non-Roth IRAs, you have to start taking RMDs by April 1 of the year following the year in which you turn 70 ½, even if you are still working.

This is an annual requirement until the account is drawn to zero or until the account holder dies, in which case the assets can be placed into an Inherited IRA for a beneficiary or distributed to heirs in another way. A penalty of 50 percent is levied by the IRS on the amount not withdrawn. For example, if your RMD is $10,000 and you do not make your withdrawal, you will owe the IRS $5,000 in penalties and must still take your required distribution.

The IRS does not allow tax-deferred accounts to grow indefinitely without having to pay taxes on the money. Investments in a tax-deferred retirement account have been sheltered from taxes since their initial contribution and throughout the accumulation and investment period. Thus, the IRS places a time limit on this tax deferral and mandates withdrawals through the RMD.

Most financial institutions have a process to help their clients take care of their RMDs, but ultimately the responsibility lies with the account holder. It can be an expensive oversight if not taken care of in a timely manner. If you are approaching the age for RMDs, talk with your advisor.

By |February 27th, 2018|Current Affairs, Retirement|