★ Rockstar Review: Personal Capital (Financial Tracking App)
Hey guys! So something we haven’t done a great job of here on the site is sharing our favorite financial apps and services that we’ve come across and/or use personally.
So as part of our new series we’re launching each day here, we’re slotting every Tuesday to be the new day where we do exactly that – share (and review) the best financial products out there. We’ll cover the new stuff, the old stuff, the apps, the web-apps, the services, the browser extensions, and pretty much anything else relating to money we think you’ll find helpful.
If you end up trying any and falling in love, let us know!
We start today with one of the crowd favorites among us personal finance bloggers – Personal Capital. And giving you the inside scoop of it, along with screenshots of his very own account as he’s obsessed with it, is our forum moderator (and soon to be early retiree!), Steve Adcock.
Take it away, Steve!
Personal Capital Makes Tracking Finances
(And Net Worth) Super Easy
I love automation. There’s something deeply satisfying about building something and then sitting back and watching it work. Investments are good like that. It’s money that works for you. Everyday, your net worth is tied up in how well your investments perform. And your debts. And your savings. And virtually every other money account to your name. It’s fun, but it also gets confusing, and fast!
Enter Personal Capital. This web-based application has made tracking my net worth ridiculously easy, even for someone like me who royally sucks at math. The Dashboard displays my net worth number at the very top along with a history graph of my net worth over a period of time. Trends can reveal valuable insights into how well our money decisions are paying off – literally!
Everything from my overall net worth, to cash flow and portfolio balances, are displayed right there in front of my hazel eyes. No crunching numbers. No Excel spreadsheets. It’s all right there, colorful and organized. Not too bad, eh?
Oh, and it’s completely free to use, too.
How Personal Capital works
Personal Capital works by connecting to your financial accounts online. The system requires that you provide login details for the accounts that you want to track, like bank accounts (Chase, Bank of America, etc), investment companies (Vanguard, Fidelity), credit cards, mortgages and anything else.
The system will then periodically log in to those accounts to retrieve the data it needs. It will even track real estate properties based on the address. It does this automatically and requires no intervention from you. If you change the password for one of your external financial accounts, however, you will need to update that password in Personal Capital to maintain communication with that account.
I’ve had to do this several times, but it’s an easy process.
Personal Capital is not a financial company like Vanguard or Fidelity. It is a wealth visibility tool that gives users a complete, easy-to-read picture of their entire financial life.
They do offer financial advisor services, but more on that later.
Let me show you some of the best features of them. All screen shots were taken from my own account using live data. No numbers were altered in the writing of this review – promise!
We will begin with my favorite page – the Dashboard!
The Dashboard, aka The “Money Shot”
I like to call the Dashboard in Personal Capital the “money shot”. It’s the page you see after logging in and it provides a quick snapshot of your entire financial picture. It is also your jumping off point to other parts of the application. This page shows me whether I’m smiling that day or not!
The screen shot below displays an example of what the Dashboard looks like. Notice the right-hand side of ‘Net Worth’ – that’s a peek into your Holdings and provides a quick and dirty analysis of how well YOU did in the market the previous day.
My ‘Net Worth’ number is essentially a calculation of my assets, minus any debts. Personal Capital will add up all assets (ie: cash, investments, real estate properties, etc) and subtract all debts (credit cards, mortgages, loans, etc). The result is my overall net worth that is displayed at the very top of the Dashboard page. Anything over $800,000 makes me a happy personal finance blogger.
The ‘Cash Flow’ graph tracks money in vs. money out. ‘Portfolio Balances’ provides the value of all of my investments. I use this number to help determine just how much of my overall net worth is made up of investments rather than, say, homes or rental properties, savings accounts and other wealth avenues. Lastly, ‘Portfolio Allocation’ tracks the type of my investments. In this example, U.S. stocks hold a commanding share of the overall investment picture.
Each of these headings is clickable for a deeper dive into these areas. We use the Net Worth, Cash Flow and Portfolio pages the most. Let’s dissect each one below and then take a look at a couple other features of Personal Capital.
The Net Worth Page
I love this page. The Net Worth page in Personal Capital provides a no-nonsense look into my total net worth and further breaks that number down by the areas that make up the total number.
Notice the tabs at the top of the screen. When ‘All’ is selected, you’re looking at your overall net worth. A configurable graph shows your net worth history and a table below the graph lists the individual accounts that make up your net worth. All this data is clear and easy to digest; writing as someone who was never a wiz at math going through school, I appreciate this simplicity!
As you can see, we keep quite a bit of cash in our Ally savings account, which serves as our emergency fund plus the source of our income over the first three years of retirement.
Click on one of the other tabs at the top (ie: Cash, Investment, Credit, etc), and the graph and table will only display those accounts. For example, clicking ‘Cash’ displays a history graph and table of your bank (both Checking and Savings) accounts. Clicking on the ‘Credit’ tab will display your credit cards, complete with your credit limit and interest rates associated with each. Super cool!
Here is a screen shot of the ‘Credit’ tab selected:
Here, our Bank of America bank card and Chase credit card are listed. Notice the APR, Credit Limit and Credit Used details to the right of each card. It can’t get much easier than this.
When you sign up for a Personal Capital account, click through each of these tabs and check out everything that you have access to.
Now, let’s talk about cash flow. This is a measure of the money coming in versus the money going out – in other words, income and expenses. Personal Capital will pick out and organize everything related to your cash flow into simple graphs and charts.
The Cash Flow Page
Personal Capital does an amazing job at isolating your income and expenses into an easy-to-read picture. The screen shot below shows the ‘Income’ portion of my cash flow picture.
Boom! Everything related to my income is displayed and categorized. This page makes it easy to determine my largest and smallest sources of income. Here, paychecks were easily the biggest income source over the 30-day period. Yeah, full-time jobs definitely have that effect.
Click on ‘Expense’ at the top of the page to look at all money going out. Once again, every expense is categorized and displayed in a similar fashion – only this time in red. The screen shot below shows what this display looks like for me.
Personal Capital does a pretty good job at categorizing expenses, but it is not perfect. Individual items can be re-categorized by double-clicking on the category value in the table below the graphs (for example, double-clicking on ‘Personal Care’ in the table will allow you to change that category to something different). This same procedure holds true for the Income page as well.
Use the cash flow tools in Personal Capital to pinpoint areas of high spending or low income. Or, just browse through these pages to get a feel for where your money is going. No spreadsheets. Very little maintenance.
Next, we will check out the ‘Portfolio’ page.
The Portfolio Page
Your portfolio is your collection of investments, and Personal Capital does a nice job at bringing all that data in, organizing it and displaying it back to you. Once again, there are several different screens to choose from that will display the information that you are most interested in. Here is a screen shot of what the ‘Balances’ tab of the Portfolio page might look like.
Like many of the other pages in Personal Capital, a history graph is displayed along with a table that shows every investment account that makes up the larger portfolio. Notice the percentage and dollar figures in the table to the right of each account.
Click through those tabs for a different look at your portfolio. For example, here is another screen shot, this time with the ‘Holdings’ tab selected. The ‘You Index’ isolates your individual performance over the time period selected on the right. I didn’t do very well when this screen shot was taken. Boo!
As you’ve seen, Personal Capital makes it very simple to grasp your entire financial picture quickly and easily.
The navigation menu (screen shot below) at the top of every page provides easy access to common information, like every transaction (withdrawals, deposits, dividend income, transfers, etc), or all income or every expense, all in one configurable table. It can even track your unpaid bills.
Colorful charts, graphs and tables are not everything that Personal Capital can do.
Let’s take a look at a couple of the other features of Personal Capital, starting with their Retirement Planner.
The Personal Capital Retirement Planner
The Retirement Planner is Personal Capital’s way of analyzing your financial picture and calculating the chances that you will meet (and exceed) your financial goals.
Access the Retirement Planner from underneath the ‘Advisor Tools’ dropdown menu at the top of the page. Then, you’ll be asked to provide some additional information for Personal Capital to use in its calculations. The screen shot below shows the kind of information you’ll be asked to provide. These values can be tweaked at any time, which will trigger an update of the calculations.
Many of these items you’ll need to estimate, and that is okay. Do the best you can and let Personal Capital run the numbers. Feel free to experiment a bit to see how your retirement picture looks as your savings rate or anticipated spending, for example, change. Here’s an example of what your results might look like:
Woohoo! We are in good shape to retire. Remember that these are just estimates based on the data that you provide, and I’ve found them to be fairly conservative in nature. Your flexibility and willingness to adjust will increase your chances of accomplishing your goals. But, I love their retirement tool and use it as a good foundation, or starting point, if things ever change.
Another feature I like is their Investment Checkup tool, which analyzes your investment portfolio and makes suggestions for improvement. Personal Capital will compare your performance against the larger market, analyze your diversification and offer ways to reduce risk. Let’s take a look at how this works.
The Investment Checkup Tool
Access the Investment Checkup tool from underneath the ‘Advisor Tools’ dropdown menu at the top of the page. Personal Capital will analyze your portfolio and generate a “Target Allocation”, which is its recommendation of changes. Personal Capital determines your Target Allocation based on your current investment profile.
In my case, there weren’t substantial differences between my current allocation and Personal Capital’s recommended Target, but I still enjoy looking at alternatives.
This is Personal Capital’s Target Allocation. Note the differences in the table to the right of the graph. In this case, Personal Capital recommends that I strengthen investments in US Stocks and Alternatives and reduce the amount of money left in Cash (ie: Checking or Savings accounts). It also suggests significantly reducing investments in US Bonds.
With this new Target Allocation, we get to dive deeper into the data as we scroll down the page. For example, the ‘Historical Performance’ section of the Investment Checkup tool compares the Target against your Current allocation in the market:
Scroll down through the other sections of the Investment Checkup tool for more comparisons between your current and target allocation. This data will help you to determine whether a rebalance of your portfolio is wise. Please note that I almost never change up my portfolio based on software recommendations, but I still enjoy using this tool as a means to compare my performance against differing strategies.
A word of warning: This tool, along with the Retirement Planner (and every other ‘Advisor Tool’ in Personal Capital) is built around how Personal Capital makes money. Let’s chat about that for a second.
How Personal Capital Makes Money
Everything that I’ve showed you in Personal Capital is 100% free. You don’t even have to provide a credit card when you sign up. However, Personal Capital does make money, and they do it by offering personal finance advisor services.
When you sign up for an account, you are assigned a personal financial advisor. His or her contact information is displayed on your Dashboard page. Using the financial advisor for advice or help in making changes to your portfolio is NOT free. There are fees associated with using this service. When I first signed up for Personal Capital, my financial advisor called me a couple of times to setup an appointment to go over my financial life. I declined both times and the advisor got the hint. We may get a call every now and again, but for the most part we don’t feel pestered by them at all.
Thus, I cannot personally vouch for their advisor services because I have never used them. I can, however, wholeheartedly recommend their web site. It is well built, fast and easy to use. Everything is clear and direct. Uncluttered.
And when it comes to visualizing my entire financial picture, Personal Capital is a complete lifesaver.
Interested in checking Personal Capital out?
Try it here (for free).
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