I’ll admit: as a personal finance blogger I love checking out new tools and things to make my life easier. From Peer to Peer Lending, to different budgeting tricks, and ways to cut down bills…if it can potentially help our financial situation, I’m interested in it.
I’ve been tracking our Net Worth for a while now. I always had a general idea of where I stood, but as I’ve changed jobs over the years and my investments have gotten a bit spread out, it sometimes got difficult to see just how much I (now we) had and what progress looked like over time. My new favorite tool to use to help me track that – as well as budgeting – is Personal Capital.
Personal Capital: The Basics
If you’ve ever used Mint, you’re pretty much already familiar with the basics of Personal Capital. After you register for an account, Personal Capital will gather information to connect to your various banking, credit, loans, and investment accounts. It uses this information to paint your financial picture. It includes things like keeping track of your net worth, your spending, even your investment fees.
If you’re struggling with knowing which metrics to track, quit worrying: Personal Capital covers all the basics for you and then some.
First thing most people think of when they hear this is security. It’s a valid concern: identity theft is not a joke, Jim (+ friend points to those who get this reference). I won’t get into specifics here, but if you’re interested in reading up on their security measures, they have a page that outlines that. They are also regulated by the SEC. Personal Capital must follow the same security standards that banks use.
Personal Capital lets you connect a ton of accounts. You can easily add accounts from a number of different banks and investment firms, and you can search for more if you need to add some not on the list. The information you need to provide varies; sometimes it’s login credentials, but other times it’s a token (ex: Capital One 360 uses a token instead of your login credentials).
Finding how to connect your accounts is pretty straight-forward. I haven’t run into any issues connecting anything.
Overview Dashboard: Your Financial HQ
Your Overview Dashboard, when you log in, gives you a snapshot view of your connected accounts. It’s like your own little Financial Headquarters where you can dig in and get a ton of information. Here’s what mine looks like (with the numbers blocked out).
This lets you take a look at some of the key financial metrics. The big ones are net worth (upper left), how much extra cash you have (upper middle), and your cash flow (middle left). You can also see how you’re doing on your budget (middle), how you’re doing compared to the rest of the market (upper right), and some additional news and reading for you (right).
Net Worth & Investments
Clicking on these items will let you drill into them. When you drill into net worth, for example, you can further drill in to see how your investments specifically have trended over any period of time (as far back as last year). Another great thing is you can see how much you’re paying in fees for each of your accounts.
Fees can eat up a ton of your potential returns. If you have high fees, it’s a good opportunity to look at ways to reduce them. Looking at my dashboard above, I have an old 401(k) that’s performed decently well at Wells Fargo. I’m losing 0.84% of my returns to fees – which adds up to hundreds of dollars each year. That’s a red flag to finally roll that over. That 401(k) is not outpacing low cost index funds by over .75%.
That 1.1% is unfortunately my current 401(k) plan, and there’s no hope in reducing that presently.
As you might expect, you can click into each of those accounts for transactional information if you want.
Banking: Cash Flow
While net worth is great, it’s not the end-all. Knowing how your monthly cash flow looks is still important so you can see how you’re trending. Thankfully Personal Capital makes it pretty easy to check this out as well.
As you can see, we had a pretty expensive summer. We paid for our wedding, and that meant we knew that our cash flow would take a temporary hit. From March through June our numbers look rough, and we’re slowly recovering from that. Thankfully we knew what to expect, so even though our cash flow was negative, it all came from savings.
Another cool banking feature is you can also see when your upcoming credit card bills are due. If you auto-pay in full this isn’t nearly as helpful, but if you’re manually paying your bills, this can help keep you organized. Still, it’s a nice one-stop-shop if you would find yourself otherwise logging in to multiple credit card web sites.
They do their best to auto-categorize your expenses, and you can drill in to see which categories take up the most of your money. It may be a worthwhile thing to check this even if you don’t budget regularly. If you are finding that money is going somewhere and you’re not 100% sure where it is, this tool should be able to let you hone in on it. Personal Capital doesn’t always get it right. Sometimes the categorization is a bit wonky and either incorrect, or things come in as Uncategorized. When that happens you’ll have to manually fix them.
Hours of Fun with the Retirement Planner
The Retirement Planner is an awesome tool that Personal Capital lets you tinker with. By default, it’ll pull in some of your saving and spending habits from the dashboard to populate the graphs. You can override these easily and throttle them as you see fit. Doing so will help you forecast what your portfolio balance over time may look like.
You can mess with all sorts of assumptions. Inflation rate, social security for you and your spouse, increases in savings, etc. Planning on paying for college for a kid? Add that in as a Spending Event. Selling the house when you retire, or expecting a pension? You can add that in as an Income Event.
This thing is super customizable and uses historic data to run thousands of simulations to determine if they think your plan will be successful or not.
Not 100% Perfect
The one thing I dislike about it, however, is that it doesn’t let you increase your spending in retirement very easily. We may start with a goal amount of spending each month, but with inflation you’d expect that you’ll need to increase that amount. The planner doesn’t let you do that. You can get around it by adding in ‘extra’ spending events, but it’s kind of a pain.
Looking at that graph above, you can see that there’s a pretty good chance that the scenario I laid out there has a good chance of lasting until at least we’re 93. That makes some assumptions about a bunch of things, and it’s still a bit early to be planning a retirement 20 years out, but it’s helpful to think about. What sorts of changes might we need to make to make that 10% line less intimidating? Is it even worth the time to worry about – knowing that we’ll have some unaccounted-for income, and that’s a worst-case-ever scenario?
There’s a ton more stuff within Personal Capital that I didn’t touch on. Detailed budgeting tools, weekly spending email updates if that’s your thing, and ways to break down your portfolio by asset class. Want to know how much of your net worth is composed of international stocks? Personal Capital‘s got that covered. Another must-see is their Retirement Fee Analyzer which lets you see specifically which funds have the highest fees, what those are costing you annually, and it’s impact on your portfolio over time.
They also have financial advisors who can review your portfolio for a percentage fee. These aren’t free, but they’re definitely less expensive than some others I’ve seen. I don’t use them right now, so do your due diligence if you decide to go this route.
Your One Stop Shop
I pull up my Personal Capital profile probably two or three times a week. I can see all the things I care about in an awesome centralized location. Mint used to be my platform of choice, so in a lot of ways this is extremely familiar. It’s got a few draw-backs, but overall it suits my needs better than Mint does – and it’s fun to tinker around with.
If you’re not using a tool similar to this, I highly recommend checking it out for yourself and seeing if it paints a different picture for you than you may have thought. As they say, knowing is half the battle.
Do you use Personal Capital or another similar tool to aggregate your financial information? Or are you oldschool with Excel? Or, worst of all, do you not do this sort of thing at all?
Disclaimer: If you register for a Personal Capital account through the links in this article, I may receive compensation. I never recommend things I don’t personally use and believe in. For more information, please read my full Disclaimer.