To get better insights into your finances, I highly recommend signing up with Personal Capital. It is a FREE financial platform that aggregates all of your accounts in one place and provides many great wealth management tools to manage your retirement nest egg.
Why You Need Personal Capital
Big time saver: I have over 15 accounts with six different financial institutions for my brokerage and retirement accounts, checking/saving accounts, and credit cards. Before Personal Capital, it took me FOREVER to aggregate all of my assets and credit to calculate my net worth.
When you sign up for Personal Capital, you’ll be prompted to link up your accounts (don’t worry it is very safe). Your data is encrypted with AES-256 with multi-layer key management. Plus, no individual at Personal Capital will have access to your credentials.
Once everything is set up, you can just log in and the site will automatically update all of your positions to show the progress of your net worth.
Your dashboard not only updates your net worth, but also a quick view of:
- Cash flow over the past 30 days
- Your portfolio balance
- Portfolio allocation
- Your biggest stock winners and losers for the day
Track income/expenses: Personal capital tracks all of your cash inflows and outflows. This makes budgeting so much easier. Now, you don’t have to guess how much you’re spending on groceries or restaurants or travel. The track cash flow feature allows you to see where every penny is going, so you can watch your money like a hawk!
Portfolio performance: Portfolio performance is an amazing feature! It calculates the return of your portfolio relative to the performance of the S&P 500, the Dow, a foreign index, and a U.S. bond index. You can adjust the return period on the top. This is a great tool to see how you are stacking up against the index!
One important thing to keep in mind is that portfolio performance does not factor in when you purchased your positions. It is assumed you held them at the beginning of the period measured.
This can cause some inaccurate readings if you purchased new positions recently. However, this is still a great tool to keep track of your portfolio performance.
Portfolio allocation: Personal Capital provides many ways to analyze your portfolio so you can make informed decisions. One of the amazing tools is the portfolio allocation feature. Portfolio allocation breaks down your portfolio allocation in major asset categories by percentage and dollar amount.
US Sector exposure: Another similar feature to portfolio allocation is US Sectors. This aggregates all of the positions in your portfolio and shows the sector exposure for your US stocks. This way, you can get a snapshot to see if you have too much (or too little) exposure to a sector.
When I first this application, I found out I had too much exposure to the financial sector so I performed some appropriate rebalancing.
Investment checkup: The great thing about Personal Capital is that it has so many great (and FREE) financial advisor tools to help manage your wealth.
One such free tool is the investment checkup feature, which provides a detailed assessment of your holdings and some recommendations for:
- Target allocation: Personal Capital provides a recommended allocation for cash, bonds, and stocks.
- Historical performance: It shows how your target allocation would have performed relative to your current allocation on a historical basis.
- Future projections: Personal Capital will project how much more (or less) your recommended allocation will have on your net worth at retirement!
- Risk and return: Personal Capital shows how you can reduce risk without reducing your expected return.
Retirement fee analyzer: This is by far the most useful tool Personal Capital offers. Over 90% of Americans have absolutely no idea what fees are in their 401k plans. You could be losing over 5% of your earnings to fees and not even know it!
With Personal Capital’s retirement fee analyzer, this should no longer be a mystery! Input data about your annual contributions, company 401k matching, and other assumptions and it’ll calculate how much money you will lose out to fees until retirement!
If your fees are much higher than the benchmark I would strongly suggest switching out into a cheaper index fund.
Amazing retirement calculator: Personal Capital has one of the best retirement calculators out there. The application will ask you for a variety of inputs such as age of retirement, annual savings, annual spending at retirement and calculate how you’re doing relative to your retirement goals.
It will then run over a thousand simulations based on stock and bond market returns. The application will then tell how how close you are to achieving your financial goals!
Email updates: You can elect to receive weekly emails from Personal Capital. They will send you a quick summary of what happened with your personal finances over the past week including:
- Your spending relative to the prior month
- How much your portfolio holdings increased/decreased
- The increase/decrease in your net worth
The cost of Personal Capital: Personal Capital is completely FREE to all users. Personal Capital makes money through its wealth management division that manages accounts for users if they reach a certain net worth range. I do not currently use their wealth management services.
Personal Capital is a great way to get your budget in check, monitor your net worth, and get amazing financial advisor tools. I have been using it for the past few years and it has made an incredible impact on my financial health. I highly recommend this free tool for anyone serious about managing money better. Click here to sign up for Personal Capital!