What is Personal Capital?
Personal Capital provides software and online tools that help you manage all of your investments in one place. Their mission is to help you manage your wealth and achieve financial independence.
They have three different tools that can be used at different stages of life or for different goals – Personal Capital, Retirement Planner and Spend Tracker.
Personal Capital
Personal Capital gives you an overview of all of your holdings and lets you track your net worth. It offers a financial dashboard that is helpful to see and track all of your net worth and other holdings. The dashboard also provides insights into your net worth by comparing it to the average net worth by age group, community, gender and investment category. Personal Capital offers monthly, quarterly and annual spending reports and goal tracking. The tool also offers insightful reports on spending patterns, investment options and financial products that could be of benefit to you.
How Personal Capital Works
Sign up for a free Personal Capital account to track your net worth, manage your cash flow and create helpful tools such as a budget, spending plan, investment tracker and retirement calculator. It takes only a few minutes and is completely free.
Personal Capital helps you plan and achieve your financial goals. It combines your financial information and lets you track your net worth alongside your asset allocation, spending and tax information.
This is by far the easiest and best free tool I’ve seen to analyze my own portfolio. If you’re not already using Personal Capital, I highly recommend you do.
You can visit Personal Capital to sign up for free. It only takes a minute and is by far the best way to track your net worth.
The Free Version.
Before we get into a review of the paid premium version of personal capital, we should probably look at what is the free version, and what extra you get when you pay.
Let’s start with just what you get in the free version. You can create a watch list of stocks you want to follow, and get prices and charts on them. There are some advanced charting options, and you get a basic idea of the PE ratio.
You can set up a watch list, and a portfolio, get a graph of the portfolio of what it will be worth over a certain period of time.
The totally free account will allow you to set up an account, setup a watch list, add your portfolio and see how it will grow. Let’s take a look at the top features that you get for free.
The Premium Version.
Do I Need to Upgrade?
Once you start setting up your retirement calculator, you might discover that the free version, Personal Capital, is not enough. In order to fine-tune your investment strategy, you need the capability to compare multiple financial products and income scenarios. Plus, to do this, you need a lot of information.
There are three main differences between the free and premium versions of Personal Capital: portfolio composition, asset allocation advice and financial planning advice. So I’m not going to dive into much detail on the free version, but I will touch on what’s in the free version, the limitations of the free version, and what you actually get for your money with the premium version.
1- Portfolio Composition and Asset Allocation Advice
If you’re like me, you want to be guided by someone who is knowledgeable to help you create a personalized investment strategy. The free version of Personal Capital does this by providing a suggested portfolio composition, along with suggested target allocations for different portfolios. The difference between the free and premium versions is that the premium version also provides you with access to asset allocation advice based on different inputs.
Review of Personal Capital Tools and Benefits
Personal Capital is a great free tool that can help you manage your money more effectively. It focuses on asset allocation for wealth management strategies.
This means it helps you manage all of your financial accounts so that you can achieve better returns than holding your investments separately.
The tool can be used as a comprehensive software package used by investing experts, stock brokers, and financial advisers. In fact, it has become the choice for many financial advisors because of its robust features.
It is also used by other professionals to manage their investments in a manageable way. For example, physicians, business owners, artists, and athletes.
Any investor can use, make and manage their investment portfolio with the tool.
Managing your investments can be very complicated because it involves so many other aspects of your life. In fact, most people don’t know where to start. And tools such as Personal Capital can be really useful for you as you try to juggle all these aspects.
As you can see below, the software offers a wide range of tools, including tax optimization options, location tracking, retirement fund analysis, investment advisory services integration, real-time trading information, personal finance management, cash flow tracking capabilities, insights, balance tracking, reminders, and more.
The Investment Checkup
If you don’t know how your investments are doing, you might be out of the money game. That’s not good for your retirement plan.
If you haven’t looked at your investments for a while, there’s a good chance some of your holdings have gone south. Like a lot of us, you may not know what you own. But just because you don’t know what you own doesn’t mean you took a loss. The financial world has developments that can occur that can have a significant impact on your financial future.
It is very important that you look at your investments at least once a year. What is even more important is that you look at them more often than that.
The best way to look at this is to set a schedule to look at the progress of your investments.
Go through your portfolio (including your 401(k), Roth IRA, 403(b), life insurance policies, and a couple of employer-sponsored investment accounts) and look at each investment you own. Keep a spreadsheet of the information for each investment. And use Personal Capital to help you. Personal Capital will do this for you for free. It will also help you manage your overall financial plan and it will keep your investments in perspective.
401(k) Fund Allocation
According to Fidelity, the 401(k) was created to help savers reach a target retirement date with time to enjoy retirement (typically 65).
Remember most of your companies 401(k) has a vesting schedule. That means your employer will typically give you from 3-7 years to become vested.
A large chunk of 401(k) plans are invested in target date funds. The target date fund allows you to save money and spend less time managing your 401(k).
These target date funds do a great job in reducing your risk and your anxiety by asking you to make one decision. The majority of individuals take a date early and that is 50. These are typically invested in a portfolio with 50/60/70/80/90/100 year life span in it. How much money you will need to retire is a factor of the life span of the fund.
These goals help you to save more and spend less time managing your portfolio. However, remember your age is a factor in the life time of the fund.
Some target funds have single assets never diversified to reduce risk and give you more return. The one asset will be equities.
Some have 30% bonds. Some have 50% bonds. Some have 60% bonds. Some have 40% bonds. Some have 0% bonds (there are even negative percent bonds).
Retirement Planner
Manages Your 401k, IRA, & More.
Millions of people manage their finances on Personal Capital. They manage all their investment accounts, even ones held at other financial institutions. Personal Capital is a free financial service that looks at all your households accounts and investments and then shows it in one simple dashboard.
You can connect all your accounts, including your 401k or other investment accounts, your bank accounts, credit cards, mortgages, loans, and even your cryptocurrency. It has plugins for your favorite accounting and tax software. So let’s say you use Quicken or TurboTax, you can have all your accounts downloaded in the Personal Capital dashboard. Then all your asset positions are listed against their corresponding accounts. Seeing all your assets in one place will definitely protect you from mistakes.
Also, when it comes time to do your taxes, just download your transactions and all your holdings will be available in the tax software.
Net Worth Calculator.
Track Investment Portfolio, Cash Flows, and More.
Personal Capital is a free, web-based platform that helps you manage all our investment accounts in one easy-to-use platform. With Personal Capital, you can get a clear view of all your investments, including all your 401k accounts, so you can see the big picture. This is very important because you want to ensure you are following all the company retirement plan rules as well as accounting for a 401k loan.
The other missing piece of investment management is cash flow and budgeting. Personal Capital incorporates a cash flow template and expense tracking. That way, you can see how much you are spending and whether you are on track to meet your financial goals.
In addition to net worth monitoring, Personal Capital offers a 401k Fee Analyzer. It tracks and analyzes your investment performance to see if you are paying too much in fees. Once you have all of your accounts in one place, you can see if you are being charged too much. If you are, you can move your 401k account to a lower-cost provider.
Personal Capital also allows you to stay on top of your online banking. Notifications are available for account balance, and you can also receive alerts for items like a big deposit, and there is an ATM locator as well.
Cash Flow Analyzer.
Most people have at least three different sources of income.
Personal Capital’s Cash Flow Analyzer immerses you in a visual representation of your income and expenses over time. You can track your cash flow from all three income sources and easily see when things are going right and when are they going wrong.
Since income and expense is broken down by month, you can see if you had more income than expenses in the first half of the year but more expenses in the second half of the year.
The only other item that needs maintaining is your asset allocation.
As an additional service, Personal Capital offers some asset allocation suggestions using their retirement planner tool. However, some people have expressed concern that Personal Capital’s retirement planner tool is somewhat limited. To keep up with the latest research and user feedback, Personal Capital also has a blog where the asset allocation team and others discuss current investment trends and retirement planning issues.
Mobile App.
Step-by-Step Investment Checkup. At a Glance.
If you’ve ever tried to manage your investments on your own, you know that it’s a big time investment. Planning holds you accountable, but it’s time consuming and hard to keep track of what you’re doing. Plus, it’s easy to get distracted by something that’s going on in the moment and put your plans on the back burner. With Personal Capital, you don’t have to worry about ever getting off track because they integrate a step-by-step investment checklist directly into their budgeting app.
All you have to do is set your financial goals, and Personal Capital will do the rest. After you’ve established your goals, Personal Capital will send you a step-by-step investment checklist to keep you on track.
After the past few years of investing, I know a thing or two about keeping myself on track. There’s nothing easy about it, especially when you’re starting out. You have to manage your emotions, and that’s not always easy. With Personal Capital, your step-by-step investment checklist will do the emotional manage for you.
Tax Optimization.
Personal Capital is for those who are very investment savvy, as they cater to the high-level needs of different investors. The software gives you access to every investment in your portfolio, including IRAs and 401Ks.
Investments can be combined into one view, and tracking portfolio performance is much easier than with most other investment apps and websites. You can view your total portfolio net worth, income-generating assets, and investment expenses.
Secondly, Personal Capital allows you to run scenarios, which is where the tax management-focused expertise comes into play. Typically, most investment apps and services try to maintain simple user interfaces, but Personal Capital forgoes that in favor of more comprehensive, powerful features. You can compare the income statements and balance sheets of portfolios under different tax strategies. This is incredibly valuable for long-term investors, as taxes can be a deciding factor when determining investment returns.
Site Security.
Personal Capital uses AES–256 encryption, the same chip technology banks use.
Personal Capital is audited to ensure their websites are secure and safe.
Crash Test Your Portfolio.
Protect Your Future.
I’m glad you’re here. Today I’ve got something special for us to talk about.
I think the concept of online investing is simple, but the implementa-tion is NOT. We’re looking at the future of finance here, and let me tell you, I’m a little bit worried about a lot of the online investing options out there because the details can be astonishingly confusing.
I especially fell into the trap of confusing things when I started down this path. When I was thinking about retirement, I decided I would open a traditional IRA and invest in a 401K, as I was familiar with that idea.
I sorted through dozens of options and landed on a traditional IRA/401K through Fidelity, which basically meant I could invest in Fidelity mutual funds. My dad had a retirement account with Fidelity so I figured I’d use the same tools I knew he used.
So I opened my IRA, set the auto-deposit amount, and sat back and waited for the funds to roll in. I was feeling good about myself, thinking that this was the start I needed to retire comfortably.
That’s when I discovered an issue. I had actually crashed my retirement account.
Is Personal Capital for Me?
Personal Capital is a free service that is referred to as a “robo-advisor.” That means Personal Capital will automatically invest your money for you and then keep track of your investments… in one place.
So the first thing we have to answer is “Is Personal Capital for me?”
The answer is that Personal Capital is suitable for people of all ages and all investment levels.
A lot of people don’t want to think about their investments too much and just want to see their “numbers go up.” Personal Capital is flexible enough to have a solid plan in place and to see your money grow, but it is also simple enough to just dump your money into the service and not worry about it at all.