I’ve been using and recommending Personal Capital for longer than I’ve been a blogger. I’ve watched my net worth grow and have seen the performance of my investments with their intuitive tools for six or seven years now.
You probably already knew that you can track the detailed balances and holdings in all of your accounts, including investment, checking, savings, and credit cards with one login.
It should come as no surprise that they also display your investment returns; I used their charts in my quarterly updates for years until I stopped publishing them.
However, when you start to click around Personal Capital’s site a bit, you may find features that you didn’t know existed. I know I did.
A few disclaimers before we get started:
Yes, this site is compensated if you sign up via my links and track a six-figure portfolio. Thank you for supporting our charitable mission!
Yes, you can expect to be contacted and invited to go through a portfolio analysis with one of their advisors. I have done so, and I found it intellectually interesting, but I was not interested in their investment management service. You can decline and ask them not to contact you. If you ignore them completely, you can expect them to be persistent. Playing hard-to-get is a bad idea unless you enjoy the attention.
No, I do not recommend you use them as your financial advisor. I think you’re better off with either DIY, a roboadvisor like Betterment, or a human fiduciary with fees well below the industry average.
Yes, I am comfortable with their security. You’re probably better off logging in to one place to view your info than logging into every account separately. Personal Capital doesn’t actually store your passwords for those other sites, and the access they’re granted is read-only, so it’s not like a hacker could transact on any of your accounts even if they could access your dashboard. Learn more about how they work with Norton, VeriSign, and Yodlee to keep your information secure.
With those disclaimers out of the way, here are 5 cool things you can do when your accounts are connected at Personal Capital.
#1: Track Your Spending
Perhaps you did know this, but for a long time I didn’t. It makes sense since it syncs your data from checking accounts and credit cards. They automatically categorize each transaction and, of course, you have the ability to edit those categories and manually enter cash purchases.
Tracking spending is vitally important to any plan to pursue financial independence or simply to get a handle on your own finances. If you don’t know how much you spend each year or where the money is going, it’s tough to improve or make future projections about your spending needs. They also believe in budgeting for those who need it, and they’ve got a guide on How to Master a Household Budget.
When I started blogging, I went from having a pretty good idea of what we spent in a “normal” year (which were few and far between) to knowing exactly how much we were spending and on what. You can create your own categories if an expenditure doesn’t fit the pre-defined categories — note “Cabin” in the image below.
After three years of remarkably stable spending patterns, I stopped tracking, but it would be easy to return to the detailed reports that Personal Capital automatically compiles. Here’s one quarter from back when I was gainfully employed in 2018.
#2 Analyze Your Investment Fees
They say it’s not what you earn, but what you keep that counts. That’s true when it comes to your personal savings rate, and it’s also true of your investment returns.
The more you pay in fees, the lower your total return.
While you may be under the impression that your investment fees are minimal, Personal Capital’s Fee Analyzer will comb through your investments, calculating how fees impact your investment returns.
You may notice that the tool shows me that 1% of my earnings are lost to fees annually. This obviously depends on the earnings assumptions, which you can modify if you wish. The more meaningful number to me is the percentage of my retirement portfolio that is lost to fees, and in my case, the weighted average as calculated by Personal Capital is 0.06%, which is quite low when compared to their benchmark of 0.5%.
In the upper right, you can choose which accounts to include and exclude in the calculation by selecting the dropdown box in the upper right hand corner and checking the boxes.
You might be surprised by the expense ratios of some of the funds you’re in, especially if you made these selections years ago. Every fund in my retirement accounts, and this includes two Roth IRAs, two 401(k)s, and a457(b), has a reasonable expense ratio in the 0.03% to 0.12% range.
If you’re stuck with high-fee funds in an old 401(k), rolling those dollars over to a current 401(k) or into a rollover IRA might save you some serious money, although doing the latter could preclude you from doing the backdoor Roth. The solution may be as simple as selling those funds in exchange for lower-fee index funds you didn’t know were available or have become newly available) within the account.
#3 Break Down Your Asset Allocation in Detail
I use a spreadsheet to track my asset allocation into broad categories: US stocks, international stocks, bonds, and alternatives. While that’s helpful, Personal Capital’s breakdown is far more detailed and more accurate.
For example, did you know that VTSAX is comprised of 3% to 4% REITs? I discovered this when looking Personal Capital’s blockish breakdown of what I’m actually invested in.
Not only does this feature look at major categories, but you can also click on any individual block to see a breakdown of that category. US stocks becomes large cap core, mid cap growth, small cap value, etc… There is a similar breakdown for your international allocation, and it will update daily based on your current holdings (and the changing holdings of those holdings).
For example, here is my overall asset allocation in my taxable brokerage account. Towards the upper right, I’ve selected one account. I could use that dropdown box to check additional boxes to include other accounts to see my overall asset allocation across the portfolio.
I can click on any category to get a further breakdown within that category. We’ll select U.S. Stocks.
Here is what is essentially a Morningtar-style 3×3 style box showing a visual and statistical representation of what percentage of each category I own. If I want to see which funds contribute to any of these categories, I can click on that rectangle to see which funds contribute what percentage to make up that 28.03%.
Going back to the first multicolored allocation representation, did you notice the pink sliver showing 2.54% alternatives? Where do you suppose that comes from? It’s not like I’m tracking any gold bars here.
It turns out it’s real estate, and several of the funds in my Vanguard brokerage account have at least some real estate exposure. We can click on the pink bar to see where it comes from.
We’re not done yet. Do you know what sectors you’re invested in most heavily? And where you may be light? Personal Capital can tell you that, too.
It looks like I’m heavy on technology and light on basic materials, energy, and utilities. That’s not all that surprising given the performance of these sectors in the last decade and the way that most mutual funds are cap-weighted.
The folks at Personal Capital believe in a more evenly balanced approach across sectors, and their own back-testing shows that investing in such a way has worked well in the past. They’ll show you how your portfolio compares to what they consider to be a more ideal allocation across sectors.
I can also see how my asset allocation among U.S. stocks compares to their recommended portfolio balance.
So where does that put my portfolio on the Efficient Frontier? Personal Capital plots it out for you. I’m quite heavy on cash right now as we’re about to build a house, so that makes my overall portfolio look a little more conservative that it needs to be. Note that here, we’re looking at 22 accounts, not just one.
In spite of the large cash holding, I’m not too far from their recommended position. Do you know where your portfolio is along the curve?
#4 Track Your Retirement Readiness
I’ve played around with quite a few FIRE calculators, and I’ve found Personal Capital’s to be among the more conservative.
I view that as a good thing. A conservative outlook is a safer outlook, and it nudges you to oversave rather than take a risk by retiring with an amount that could have you pinching pennies later on in life.
Personal Capital’s Retirement Planner combines your current assets with several inputs that you can alter and displays your present status along with a projection of future assets. The likelihood of success based on conservative assumptions is also displayed in the graphical representation of your financial future.
As I’ve done in some of the other screenshots, I’ve removed some of the actual numbers displayed, including the net worth along the Y-axis here. Nevertheless, the far left of the X-axis represents today, and as we move to the right, I get older and my portfolio gets smaller or larger.
If I spend $8,000 a month now and adjust that upwards with inflation, I should do just fine. The lighter blue represents an outcome with a very poor sequence of returns and the bottom decile of potential outcomes. In that scenario, I end up with about half of what I have right now in 46 years.
The darker blue is the median outcome. What’s not displayed (again, they’re being conservative) is the 90th percentile, which would probably be 5x to 10x my current portfolio size.
With the median outcome, I still have a six figure portfolio at age 88, but it’s depleted by age 89. In the 10th percentile scenario, I run out of money before Social Security kicks in.
Of course, this also assumes that I don’t earn another penny and that I make no adjustments to my spending as I see a poor sequence of returns and an increased risk of running out of money. Neither of those would be true in real life.
#5 Track Your Debt Paydown Progress
By the time I was introduced to Personal Capital, I was already debt-free, so I don’t have as much experience with this feature, but I have used the service to track my credit card spending, so I do see the short-term debts I’ve accrued in the app.
Of course, I always pay that revolving credit card debt in full with monthly autopay set up on every credit card I own.
If you have mortgage loans, student loan debt, personal loans, or any type of consumer debt, Personal Capital can track it. Depending upon the debt servicer, the process might be updated or you may have to enter some information manually.
Either way, you’ll be able to see all of your debt in one place. It will be factored into your net worth tracking, and you can watch your net worth rise as your debt shrinks with each payment.
There are many ways to track your financial life. Which works best for you depends upon your preferences, and you may use some combination of multiple tools.
If you like spreadsheets and control, Kathryn Hannah’s Personal Finance Bundle probably has everything you’re looking for and more. If you’re a paper and pencil person, a notebook or specialized journal may be all that you need.
If you like a more automated solution that requires less work on your part, Personal Capital has an impressive suite of continually updated tools that can all be used at no cost. There is some initial setup to connect account information, and 2-factor authentication requires some periodic updating, but I’ve found the service to be quite informative and valuable.
If you’d like to get a better understanding of what you own, where you own it, how it’s all performing, and how likely it is to last a lifetime, Personal Capital can be an invaluable free tool.
Check out Personal Capital’s many features for yourself.