- Personal Capital offers a set of free investment tools to help you better understand your current portfolio and plan for the future.
- Using the investment checkup, I found $US300 in annual investment fees I was able to eliminate from my portfolio.
- While you can pay for a professional portfolio management service from Personal Capital, it offers its set of financial analysis tools for free.
- Sign up for Personal Capital today to take advantage of these smart investing tools »
If you have investments, you should know about Personal Capital. This innovative company offers both an investment service (paid) and online investment analysis software (free). I’ve been using Personal Capital for years and it has helped me save money on fees, improve my asset allocation, and better understand how my investments put me on track to reach my investment goals.
Considering the bargain price of free, I always suggest Personal Capital to my friends and family who have questions about their investments. Here’s a look under the hood at some of the tools you can use to improve your investment acumen in under an hour. No credit card, MBA, or heavy maths required.
How Personal Capital works
Personal Capital’s online investment tools are a core part of the Personal Capital Wealth Management experience, and it offers these same tools to anyone to use for free. Depending on your account balances, Personal Capital may try to upsell you to the paid investment product, but rest assured that this is completely optional.
Once you sign up for a free account, your first step is to link all of your existing investment accounts (you can also add bank, credit card, and loan accounts) to the platform. Adding your accounts allows Personal Capital to view your balances, holdings, and other account details, which it then uses to put together reports and suggestions to better meet your investment goals.
In just a few moments, you’ll have access to some incredible insights about your portfolio with the same level of information professional financial advisors use for paying clients. In many ways, logging into Personal Capital is like getting an update report from an advisor, but you can get it on demand for free.
Breaking down your portfolio
The investing section will slice and dice your portfolio into five different views, each with a different focus. At the top of the holdings section is one of the most important numbers you’ll find in Personal Capital: your total portfolio performance compared to the S&P 500 and other benchmarks.
The “You Index” tells you whether or not you are meeting or beating the overall performance of the stock market. I am invested mostly in low-fee index funds, so my performance should follow the overall market. I’m glad to see I beat the S&P by about a half per cent over the last year.
The holdings section allows you to sort your holdings by account, group of accounts, or specific investment account. For example, you could see all of the holdings in your 401(k) and Roth IRA at once, filtering out other accounts.
The balances section breaks down your investment accounts by balance and gives some useful metrics on how each account performs over time.
The performance section gives you even more benchmark comparisons and some more details on how each account is performing including cash flow, income, and expenses in the account. The cash flow details told me that I get enough dividends per year in my main stock account to cover more than a month of my mortgage!
The allocation section gives you a graph and a chart showing how your funds are invested by asset class and region. Like other views in the Portfolio area of Personal Capital, you can filter to focus on one or more specific accounts at a time.
Last is the US sectors section, which gives you a view of your US investments by economic sector. It’s no surprise to me that I’m a bit heavy in technology and financial services, but I think I want to add a bit more in a few sectors to better balance things out.
Cut costs with the retirement fee analyser
The Planning area of the site gives you tools to build a retirement plan. The savings planner helps you plan for retirement, build emergency savings, and make a debt-payoff plan.
The next section, one of my favourites, is the retirement fee analyser; it does exactly what the name implies.
At the bottom of the page, you’ll find a list of all of your retirement investments with funds listing expense ratios and total annual estimated fees. Personal Capital suggests you should pay less than 0.50% per year, but I aim for around 0.10% per year with my own strategy.
Optimise with an investment checkup
The investment checkup gives you a list of reports and graphs showing your portfolio’s breakdown and more details on fund fees across all accounts, including non-retirement accounts.
I used the fee details here to save myself about $US300 per year starting in 2012. Not only have I saved myself over $US2,000 so far, but including the effects of compounding, I will save tens of thousands of dollars by the time I retire.
Set yourself up for investing success
There is no magic trick that will make you a ton of money in the stock market with no risk. However, when you follow a thoughtful financial plan you can get the best possible results while minimising unnecessary risk. With Personal Capital in your digital toolbox, you’ll be one step closer to making sure you’re on the right track.
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