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If you’re looking to get your finances under control, the first step is understanding your current financial position. Sit down and figure out your assets, liabilities (debt), income, and expenses. Today, I want to share with you the most comprehensive service on the market to help you do precisely that – the one that I use myself. In this Personal Capital review, I will share what I like and don’t like about Personal Capital, as well as why I think you should use it as part of your financial strategy.
What is Personal Capital?
Starting with the basics, Personal Capital is a comprehensive suite of financial tools to help with investment tracking, budgeting, and retirement planning, among much more. Personal Capital is also a full-fledged investment advisor, which offers both automated and personalized investment advice.
For purposes of this review, I will focus on Personal Capital as a financial tracking tool, though I will briefly outline some of the other services offered by Personal Capital.
Overview of Personal Capital Tools
When you first sign up for Personal Capital, you will need to link your accounts to help you track your financial position. You’ll have the opportunity to connect investment accounts, bank accounts, and liabilities (mortgages, student loans, etc.).
I link all of my accounts so that I have a complete financial picture in one spot. This is one of the most powerful features of Personal Capital.
Once you link all of your accounts, a dashboard will appear that shows your net worth, a budgeting/cash flow overview, your investment portfolio balance, your retirement savings, etc.
From the dashboard, there are three primary sets of tools Personal Capital offers.
Personal Capital’s banking tools include cash flow, budgeting, and bills.
Of these tools, the cash flow tool is the one I find most useful. It shows all of your cash inflows and outflows and where you stand compared to last month. I find this useful as a high-level guide in tracking my overall spending habits.
I also don’t use the bills tool, because all of my bills are on autopay, so I frankly don’t give them much thought.
Digging into the next section of Personal Capital is where the platform starts to shine. Personal Capital offers the most comprehensive suite of investment tracking tools I have found to date.
What I like about Personal Capital is that you can aggregate your accounts (or select specific accounts) to track investment performance. So, for example, if you have a 401(k), a Roth IRA, and a traditional brokerage account, Personal Capital can combine these accounts to show your overall performance and portfolio allocation.
Personal Capital has five separate investing tools to help you in keeping track of your investments. The two I use the most are the Holdings tool and the Allocation tool.
Holdings is the tool I use the most, as it allows you to compare the performance of your investment portfolio to several benchmarks. For example, if you want to compare your return to the S&P 500, you can do that.
The Allocation tool tracks your overall portfolio allocation. So, as an example, if your goal is to have a portfolio that is 70% stock and 30% bonds, you can use this tool to see how close you are to that target allocation across all of your accounts in aggregate.
These tools are compelling, and it is by far the easiest way to aggregate your investment accounts to make sure you stay on track.
Planning tools make up the final set of Personal Capital features. And spoiler alert, they rock.
The first tool is the retirement planner. While I recognize there are countless online retirement planning tools, this is perhaps the most comprehensive.
It allows you to input assumptions on savings, social security, and retirement spending. It will then spit out different retirement scenarios showing how likely you are to be on track for your financial goals.
The next tool is the Savings Planner. It will help you figure out how much you need to save for various savings goals, such as retirement, your emergency fund, or to pay off debt. While I don’t find myself using these tools frequently, they are powerful none the less.
Next is perhaps my favorite Personal Capital tool: The Retirement Fee Analyzer. As you may know, I HATE paying fees for my investments (namely sky-high expense ratios for mutual funds or ETFs). The Retirement Fee Analyzer allows you to input your investment assumptions, and then it will tell you how much of your earnings are lost to fees.
If you’re looking to make sure you aren’t overpaying for your investments, this tool is the best around.
The last planning tool is the Investment Checkup tool. Based on your age and risk profile, Personal Capital will suggest a portfolio allocation and show you how closely your portfolio aligns with the target. If you’re just getting started investing, this tool is fantastic!
Personal Capital Advisors
While it is not how I use the tool, Personal Capital does have an advisory service where you can speak to someone about your financial goals. This wealth management service is only available to those with at least $100,000 in investable assets.
What I Like About Personal Capital
Now, I’ve covered a lot of the tools, but I want to mention a couple of other things I like about Personal Capital.
First, it is entirely FREE to use Personal Capital’s suite of financial tools. If you want to use their advisory service (as briefly outlined above), there are management fees. But again, I don’t use Personal Capital this way, and I don’t think you need to either.
You can use the Banking, Investing, and Planning tools all without paying a dime for the service.
Second, Personal Capital has a fantastic mobile app. You can track all of your financial data on your phone or tablet.
Finally, the tools are what makes Personal Capital so powerful. It is a comprehensive way to check up on your investments and set concrete financial goals.
What I Don’t Like Personal Capital
Now, Personal Capital isn’t without its faults, and I want to be sure to share with you what I’ve found I don’t like about the platform.
First, I found the budgeting tool lackluster at best. However, Personal Capital is more focused on investments and presenting a big picture view of your finances. For budgeting, stick to a dedicated tool like You Need a Budget.
Second, if you want a financial advisory service, we think there are better tools/robo-advisors like Betterment and Wealthfront. They are less expensive, have lower account minimums, and are great if you want to go hands-off.
Finally, you may get a sales call from Personal Capital to talk to you about your advisory service. However, in the years I have been using Personal Capital, I have only gotten a couple of calls, so don’t let this deter you.
Personal Capital Review: My Experience
Summing up this Personal Capital review, I think this is perhaps the best financial tracking service on the market. And best of all, it’s entirely free to use.
Getting a handle on your finances is the first step to making more informed financial decisions. Unlike other tools like Mint, Personal Capital provides detail on your bank accounts AND investments. You can learn more about Personal Capital vs. Mint to learn more.
Their planning tools are second-to-none, and when used in conjunction with some of my other favorite financial tools, Personal Capital is great at helping you point your portfolio in the right direction.
I use Personal Capital myself, and that’s because I believe in the set of tools they offer. If you’re interested in getting your financial goals on track, get started with Personal Capital today.