I have used an Excel spreadsheet to manage my finances for many years, but I guess you can’t stop progress. Because to their $0 cost, convenience and awesome features, I recently started using Mint and Personal Capital to manage my money online and through my phone. I have already shared my experience with Mint, so this Personal Capital review will focus on the tool I use to track my investment portfolio.
What is Personal Capital?
Similar to Mint, Personal Capital helps you manage your finances and investments online or through a mobile app. The service is absolutely free – all you need is a valid email to sign up.
Once logged-in, Personal Capital can automatically connect to your banking, investment and retirement accounts and download their balances and transactions. I’ve checked over 2 dozen financial institutions and found connectivity problems only with TradeKing (which is sadly the online broker I use). You can also add your other assets (such as rental properties or cars) and accounts manually.
Once your accounts are linked to Personal Capital, you can use its various tools and reports to help you manage your money and make smarter financial decisions.
Personal Capital automatically downloads and categorizes your bank transactions. Under the banking tab, you can see a detailed breakdown of your income, spending and cash flow trends for various accounts and time periods.
There is also a handy bills section, which lists your upcoming bill payments and gives you a link to the bill company’s website.
Unfortunately, this is all of the personal finance tools offered by Personal Capital. There is no way to create and track your budget or financial goals. That’s the main reason I prefer Mint for keeping track and managing my personal finances.
Investing & Portfolio Tools
Personal Capital’s investing and portfolio tools more than make up for what it lacks in the personal finance department. They are much better and more sophisticated than Mint’s.
Navigating to the investing tab brings up an overview of your entire investment portfolio. In addition to a detailed breakdown of your holdings, you can see your portfolio’s performance compared against 4 popular benchmarks – S&P 500, DOW, NASDAQ and 10-Yr Bond.
Personal Capital groups all of your stocks, mutual funds and ETFs into a “You Index” – a representation of your portfolio’s performance, extrapolated backwards. This is a really nice feature that allows you to compare the performance of your entire portfolio against the benchmarks over a variety of time periods.
Another great feature is the asset allocation breakdown. The stylish visual interface shows allocations for each of the major asset classes. You can further drill it down by geographical location, company size, value vs. growth, emerging vs. developed and bond types.
As with the “You Index”, all of your investment accounts are taken into account when displaying your asset allocation, although you can also manually select accounts to be included.
Investment Checkup and 401k Fee Analyzer
You can use Personal Capital‘s investment checkup utility to identify problems with your portfolio. The tool looks for the following:
- Asset Mis-Allocations: compares your portfolio against a standard retirement allocation for your age and points out the differences
- Concentration Risks: checks for over-exposure to a particular asset type
- Fund Costs: calculates your mutual fund and ETF costs and projects them to 20 years
If you linked your 401k plan with Personal Capital, you can also analyze your 401k fees to get an idea for how they can affect your retirement goals.
The 401k fee analyzer can help you identify the funds with the highest expense ratios that you may consider replacing with something better.
Personal Capital maintains a staff of registered investment advisors and you will have one assigned to you when you open a free account. You are not required to have any contact with your advisor and can simply use the Personal Capital money management platform for free (like I do). You can also schedule a complimentary phone consultation with your advisor to discuss your investment goals and portfolio.
If you would like a team of professionals to manage your investments for you, you can sign up with Personal Capital Advisors. You will need to transfer your money from your online broker or bank account to Pershing Advisor Solutions, who will be the custodian of your portfolio (essentially acting as your broker, while Personal Capital Advisors manage your money). Personal Capital Advisors will create a custom-tailored portfolio of stocks and ETFs to help you meet your investment goals, such as retirement.
You will not be charged trading commissions, but instead need to pay a yearly fee based on a percentage of your assets:
The free Personal Capital mobile app is available for iOS and Android devices. It can help you check account balances and transactions, investment performance and market gainers and losers when you are on the go. I don’t use it that often, but it sometimes comes in handy when I want to check my account balance before making a purchase.
Personal Capital Review Summary
Personal Capital is my favorite online tool for keeping track and managing my investment portfolio. I haven’t found better alternatives to it’s performance, asset allocation and portfolio checkup tools. Its banking and personal finance features can definitely be improved and expanded, so I will keep using Mint to track my budget and financial goals until then.
Personal Capital also gives you an option to have your money professionally managed by a team of investment advisors. The service is much more expensive than Jemstep, for example, but it offers a more hands-off approach to investing.
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