personal capital

Personal Capital – Review of the Best Wealth Management Tool on the Web

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I’ve been a user of Personal Capital’s FREE portfolio management software since January of 2015. I use it to keep track of my net worth, dividend income, sector weighting and fees. Prior to switching to Personal Capital I used Mint and FutureAdvisor. Although they’re also great tools, they don’t have nearly as many features.

These days it’s the only portfolio management tool I use for keeping an eye on things. Over 1.6 million other people use it to track their portfolio as well. I’ll spend the next few minutes explaining why.

Personal Capital allows you to:

  • See all your accounts in one place
  • Track your spending
  • Examine how much fees are costing you
  • Get an Investment checkup
  • Simulate how likely you are to reach your retirement goals

Sign up link: Personal Capital

Personal Capital Logo

Why Use a Tool Like This?

If you’re like most people you have several investment accounts. Most of us have 401(k) accounts from previous employers, an HSA, IRA and a brokerage account or two. This makes for the very daunting task of keeping track of where your money is.  At last count I have a total of 12 investment accounts of various types.  Before Personal Capital, I used a spreadsheet to track stock positions in order to decide where to allocate new investment dollars. As you can imagine that was a bit of a nightmare.

A Single Pane of Glass

Upon switching to Personal Capital my trusty spreadsheet has been replaced with a single pane of virtual glass that gives me visibility into what’s happening with all my accounts. Hooray for technology right?

A very cool feature is that stock holdings are aggregated across all accounts. For example, if I have 100 shares of AT&T in my Schwab brokerage account, and 63 shares of the same stock in my Vanguard account, Personal Capital will show a total of 163 shares when I request to see my holdings.  They don’t just add the balances in each account. The underlying assets are aggregated as well. 

Very cool.

Multiple Platforms

Investment Tracking

This part of the tool allows you to track your individual holdings, your balances over time, and the performance of a given security against a benchmark. It also displays the US sector weightings within your portfolio. Personal Capital is very big on equal sector weighting as their method of achieving good returns with less volatility. Therefore, you will see a lot of emphasis on that particular metric throughout the tool.

Personal Capital also allows you to track how your assets are allocated across Cash, International Bonds, U.S. Bonds, International Stocks, U.S. Stocks and Alternative Investments. This is especially useful if you’re trying to achieve a specific weighting in different areas or if you are rebalancing your portfolio. Before switching to Personal Capital, I could never come up with a good way of doing this.

They also have this concept of the “You Index” which is made up of all the holdings in your portfolio. This allows you to track your portfolio’s performance against industry benchmarks like the S&P 500.

Portfolio Returns

Retirement Planning

Based on your annual investment contributions and retirement spending goals, the tool runs thousands of Monte Carlo simulations to derive the probability of you reaching your retirement number. You’re then able to adjust your expected retirement spending against current investment contributions and see how those changes improve your chances of success. 

At only a 78% chance of reaching my goals, I obviously need to work harder. :-)

Retirement Planning

Tracking Cash Flow

One of my favorite tools is the Cash Flow tracker. This allows you to view your expenses and any investment income you’ve received whether it be from dividends, partnership distributions, or bank account interest.  I’m primarily a dividend growth investor so I make heavy use of this tool to track the dividends I receive as the year progresses. It is especially nice to be able to view last year’s investment income broken down by month and source. 

This allows me to easily track how my passive income is changing from year to year.

Investment Income

Fees

Few things hurt portfolio performance more than high fees. Personal Capital will examine all your accounts and project how much fee-based securities like mutual funds and ETFs are potentially costing you. Even with my low average expense ratio of %0.08, the mutual funds and ETFs in my portfolio are projected to cost me almost $30,000 over the next 20 years.

FeesDefinitivelyMatter.

Personal Capital Fees

It’s awesome that Personal Capital makes this tool available for free. The complete portfolio picture coupled with the analysis tools make it a definite winner. With the sacrifices I regularly make to increase my financial margin, it makes sense to use a well-designed tool so I can make informed decisions about how I use my capital.

If there are any questions I can answer please comment below. Look forward to hearing from you!

BONUS: If you found this review useful and want to sign up for your FREE Personal Capital account, please use this link. When you do, Personal Capital will give both you and me $20 just for doing so. Every little bit helps right?

Legal Disclaimer: The information provided and accompanying material is for informational purposes only.  It should not be considered legal or financial advice.  You should consult with an attorney, CPA or other professional to determine what may be best for your individual needs.

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