About Patrick Eng

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So far Patrick Eng has created 39 blog entries.

Compound Interest and Habits

Eng-WEBHabits – both good and bad – are something we all have. They’re part of our everyday routines, something we often do without any thought. Yet, we can all benefit by giving our habits more thought. As a financial planner, I love the idea that there’s a correlation between compound interest and habits.

“Habits are the compound interest of self-improvement,” wrote James Clear in his best-selling book, Atomic Habits*.

This idea really resonates with me.

I understand the benefits  of how investments compound interest (we essentially earn interest on our interest). The opposite is also true. If we get into debt and owe interest on the interest that is owed, that negative compounding is a detriment.

Good and bad habits work the same way. Years ago, I was in the habit of eating a bag of chips every day at lunch. I love potato chips, but eating them daily wasn’t a great habit. A good friend knew I was trying to lose some weight, and he suggested I substitute the chips with a piece of fruit. It was a small change, but a significant one for me.

The success that came with that small adjustment led me to rethink my daily soda with lunch, as well. Each small change moved me closer to being the healthier person I wanted to become.

“Success is the product of daily habits, not once-in-a-lifetime transformations.” — James Clear

Consistency

Once you decide to make a change, how do you make it stick? Consistency. Making the change automatic and trying not to miss more than two times in a row are two things that can help.

Let’s use a savings example. I have a friend who had never invested in the stock market. When she began a new job years ago that offered a 401K plan, I encouraged her to have automatic contributions withdrawn from her paychecks. Fast forward about 20 years, and she’d accumulated more than $250,000. Even though she did take some money out of the account along the way, she had still managed to save a nice sum of money for retirement.

We’re all human. We all get off track from time to time. Sometimes we miss deadlines, avoid workouts, or skip saving contributions. Give yourself room to be human. Know that you will have setbacks, and know that you can rebound. Commit to getting back at it as soon as possible.

The biggest rewards come when you have been consistent over long periods of time and your habits compound.

*When you  purchase books from Bookshop.org, a portion of the proceeds supports the independent bookstores and authors listed on the site.
By |2021-08-16T12:43:20-07:00August 9th, 2021|Financial Planning|

Learning to Live with Uncertainty

Eng-WEBA good friend and client of mine used to live in Somalia. She recently shared a great story with me about a trip she took years ago with her baby daughter. It’s a fabulous lesson about learning to live with uncertainty.

They had boarded a flight in Somalia, and all the seats were already taken. Many more passengers were standing in the aisle. They were instructed to deplane and line up on the tarmac. Then, they were told the seats would be decided by a foot race.

Passengers had to run, and those who did not run fast enough were not allowed back on the plane. My client ran the race with her daughter on her back!

We all live with uncertainty. Every day, things happen that are beyond our control. This story illustrates one of the more extreme situations that most of us will never have to experience. In the United States, we have grown accustomed to getting a seat on the airplane if we book a flight. We generally have a car available to us if we reserve a rental. We enjoy a high degree of certainty that the meal we order at a restaurant will arrive the way we like it.

All this suits me. I’m a person who loves structure and routine. Learning to live with uncertainty isn’t something that comes naturally to me.

Yet, out of necessity, I have learned to embrace change and develop the ability to adapt. It’s inherent in the career I chose. Dealing with financial markets, as well as an ever-changing economic and political landscape, has forced me to learn to live with uncertainty.

Experience is a great teacher. The more experiences we have in life, the more comfortable we can become with uncertainty.

My friend has lived through many of the ups and downs of life and the financial markets. As a client of 20 years, she has adapted well, and it has been rewarding for her and her family. Just like when she adapted to that situation in Somalia and was awarded a seat on the airplane.

 

By |2021-04-15T11:49:07-07:00April 19th, 2021|Client Stories, Current Affairs, Financial Planning|

The Lockdown Test

the lockdown testThis time of uncertainty and pandemic lockdown has been a test for many of us on many levels.  For me, working from home since March 13, the lockdown test and struggle has primarily been managing my time.

My daily routine typically includes a lot of time reading or consuming information. Lately, that has meant reading articles about COVID-19 and how the economy and markets are being impacted by this virus, as well as about what else is going on in the world.

In my initial weeks working at home, however, I found myself spending an inordinate amount of time reading. That realization made me pause. While staying informed is important, I do not need to spend four to five hours a day on this task. It’s not the only thing on my plate, at work or at home.

Prioritizing my tasks and putting time parameters on each has been a good personal exercise during this quarantine.

We all know how important it is to empty the dishwasher every day, right? If that doesn’t get done, it puts a jam on dishes and the kitchen becomes messy pretty quickly. That’s my job at home, and I make sure to do it before I fire up the computer for the day. It’s a lesson I learned early on and something my family appreciates.

The need to balance work duties and household chores forced me to clearly define my priorities and set aside appropriate time blocks for the most important tasks each day. Having all of these tasks now wrapped up together under one roof has been an interesting new test. It also has been an important reminder to occasionally review my process and fine-tune my productivity.

Our firm’s technology has given us a tremendous platform to serve clients, stay competitive and work remotely. This technology also enables us to be highly efficient, as long as we remember to use it appropriately.

How are you spending your time in quarantine? Are there things you can learn from this experience to improve your daily life and balance, both today and after life returns to normal?

By |2020-05-12T14:39:18-07:00May 12th, 2020|Advisors, Current Affairs|

Election Year Market Volatility

As we approach year-end, it is natural to consider what is on the horizon for 2020. One of the events taking place next year is the presidential election. Based on historical data, we know to expect some election year market volatility. This may lead you to ask, “How will the coming election impact my investments?”

Research assembled by Dimensional Fund Advisors (DFA) shows it’s hard to anticipate how markets will react based upon an election outcome. Nevertheless, patient long-term investors have benefited from staying the course regardless of which political party has governed the White House. (See chart below.)

“Investing during an election year can be tough on your nerves, but it’s mostly noise and the markets carry on,” says veteran Capital Group Portfolio Manager Greg Johnson. “Long‑term equity returns are determined by the value of individual companies over time. So, it’s better to stay invested than sit on the sidelines.”

Stay the Course

Uncertainty about relations with China, talk of potential recession, and the coming presidential election will make for an interesting 2020. Don’t let the inevitable corrections that take place in the market – over which we have no control – unnerve you. Being patient and staying invested through market ups and downs is key to meeting your long-term financial planning goals. Do your best to tune out the noise and focus on the things in life you can control.

Election Year Volatility

By |2019-12-09T15:11:10-07:00January 13th, 2020|Current Affairs, Investing|

Understand Why Before Deciding How

understand why before deciding howI recently sat down with a new client who needed help understanding her financial accounts. It takes two-way communication and objectivity to determine what investment strategy best serves a client’s needs. Essentially, you must understand why before deciding how. Unfortunately, this woman’s previous advisor did not take such actions.

Several years ago this person recommended (as a sales agent) she move her IRA and brokerage accounts into equity-indexed annuities. That locked up most of her investable assets for 10 years into an insurance product that levies a fee to access her money.

As we chatted, I learned she wanted to travel and take classes in her retirement. Annuities hindered her ability to do that right away. Once I took the time to understand her goals, we knew this product was not the best choice.

Situations like this are all too common and have created a stigma for annuities. Yet, some annuity products may be appropriate investments in certain circumstances. One example is a client who had not had a fixed paycheck during his career as a realtor. When he retired, we purchased an annuity for him to complement his Social Security benefits. The steady annuity income was a welcome change from the unpredictable income stream he’d had while working and gave him peace of mind in retirement.

These examples highlight the importance of knowing what you need and want before making any decisions about your portfolio. It’s critical to explore all the reasons why you are investing before deciding how to invest and what products will be most effective in meeting your goals.

To learn more about our financial planning process and investing strategies, click here.

By |2019-08-14T13:59:44-07:00July 29th, 2019|Insurance, Investing|