Personal Capital is a personal finance and investment app to help you stay on top of investments, finances, and retirement goals. When it comes to your financial peace of mind, managing your money in a streamlined and efficient way is key to your success.
If you’re looking for an effective financial management platform, Personal Capital is an excellent choice for those looking to improve their financial lives. This platform comes in two different versions, and each offers you the tools you need for successful money management and investing.
What is Personal Capital?
Personal Capital is a platform that helps you manage your money wisely and your investments. The free version is the Free Financial Dashboard and offers budgeting tools to help you manage the money in your households and investment portfolios.
The Wealth Management version is a full investment management service that offers some automated advice and personalized advisory services. You’ll also receive plenty of support from real-live financial advisors from this digital wealth management company with the paid version.
Both versions of Personal Capital are extremely popular, and almost two million people and counting currently use the free version of the service. In addition, its wealth management version is used by approximately 18,000 clients and currently holds around $8 billion in assets under its management umbrella.
Many users prefer to start with the free version and eventually work up to the wealth investment service. This service offers more hands-on, direct management and helps with investment portfolios. However, the free version also offers you plenty of helpful investment tools that can make managing your portfolio easy to do on your own.
Free Financial Dashboard Tools
If you’re interested in starting with Personal Capital, the Free Financial Dashboard is a great place to start. The free financial tools are easy to use and highly intuitive, making them a wise choice for the average investor.
Although the Free Dashboard is considered to be a budgeting application, it actually has some fairly extensive investment tools you can use, too. So if you’re looking for some insight and basic support for your current portfolio, this is a good place to start.
You’ll want to make sure you include all of your accounts and information since the dashboard serves as a financial aggregator. Accounts should include everything from investments brokerage accounts and savings accounts to checking, loans, and any credit cards you have to give you a complete financial picture.
Once you enter all of your information, you’ll have a clear snapshot of your entire financial health and situation on one single platform. Make sure you include any employer-sponsored retirement plans if you have them. This is the free version’s main focus, so it’s key to add it if applicable to you.
To understand how to make the Free Financial Dashboard from Personal Capital work for you, read on for some details about its many features.
Budgeting Tools
To track your cash flow and your spending patterns, the budgeting tool analyzes all of your spending categories as well as your individual transactions. You will also receive a monthly summary that helps you visualize where your money is going.
This software is helpful, but it’s not completely dedicated to budgeting. An example is that Personal Capital does not offer a bill payment function. That means you’ll still need to continue to pay your bills directly from your bank account or other sources.
Cash Flow Analyzer
Once you set the Personal Capital cash flow analyzer up, it tracks your income and expenses from all of your individual financial accounts. This allows the program to create a customized budget for you.
After setting up the analyzer, you can set personal financial goals such as preparing for your retirement or paying off a mortgage or other debts. It will help streamline your current cash flow and help you come up with strategies to reach those goals more quickly.
Other Tools with the Free Financial Dashboard
Some of the other handy tools that the free version of Personal Capital provides are related to retirement, for example, Personal Capital’s retirement planner. Apart from this, it also offers a 401(k) analyzer to help you discover what each of your retirement funds is costing you every month. Then, it suggests alternative ways to allocate those funds into new ones with lower costs to empower retirement savings in an easier way for you.
The dashboard also includes a retirement planner that uses several different scenarios to help you find out if you’re still on track to reach your retirement goals. You can easily adjust for any changes in your situation, like a career change, the birth of a child, or saving for major purchases like college or a new home.
The Free Dashboard provides an investment checkup tool that helps you optimize all of your accounts when it comes to investing. In addition, the tool recommends adjusting your portfolio mix in various ways to help improve performance. It also features a net worth calculator, which gives you a number based on your current assets and liabilities.
Finally, the Personal Capital free version still offers customers the ability to talk to a personal financial advisor. Unfortunately, they can’t give you any specific investment advice. However, they can still help you with any questions you have about the service and give you more information about anything that Personal Capital recommends.
Personal Capital: Wealth Management
If you want to pay for the Wealth Management version of Personal Capital, you’ll be connected with a financial advisor who can help you reach your goals based on your current portfolio. This version begins by taking a closer look at your goals, your risk tolerance, and your current timeline.
In addition to the information you put into the system, Personal Capital will also consider your personal preferences when you’re building your wealth portfolio. The whole thing is managed using the Modern Portfolio Theory, which invests across several asset classes to give you the best diversification possible.
Your portfolio will also be rebalanced occasionally so that you’re still on track to managing your target asset allocations. There are six asset classes within the portfolio: U.S. stocks, U.S. bonds, international stocks, international bonds, alternative investments (gold, energy, real estate), and cash.
The percentage in your unique portfolio depends on what you currently have in your investor profile and will also be determined by your risk tolerance, goals, and other personal preferences. Each of the six asset classes is invested in a low-cost index-based exchange-traded fund known as an ETF.
The paid version also helps you minimize fees by direct investing. When you directly invest in stocks instead of ETFs, you should reduce your annual fees. It also performs automatic rebalancing that will make the entire allocation process streamlined and easy.
The Wealth Management platform can’t directly manage your 401(k) or 529 Plan accounts, but Personal Capital is able and happy to give you personalized advice for each. And, the service also has something new called the Socially Responsible Personal Strategy. This new feature allows you to select from a personalized socially responsible investment strategy for your portfolio if you choose.
What is socially responsible investment? It’s an investment chosen in companies based on environmental impact, social impacts such as labor relations and management. All of these factors are used to determine the investment’s social impact to help you invest in things you feel good about.
More on Asset Allocation
When looking at asset allocation under the Personal Capital Wealth Management tool, it’s important to understand how the process works. Personal Capital uses ETFs and individual securities baskets to help create a customized model portfolio that suits your needs.
The company knows that annual fees can impact your bottom line and decrease your portfolio performance over the long term. In addition, they know that using index funds with annual fees can add more expenses on top of their own management fee, which is why they encourage you to invest in individual stocks to lessen the impact.
When you invest in individual securities, your wealth portfolio will also be much more tax-efficient (if everything is in taxable accounts). When you utilize this recommendation, you should end up with lower fees and fewer taxes that can affect your bottom line. Personal Capital also manages the taxes you pay with individual securities by using a process called tax-loss harvesting.
The service also offers personal funds that can target a specific investment goal. You will own the individual securities instead of a mutual fund. When you allocate your assets wisely, you’ll get more for your money while paying much less in fees and taxes.
Important Things to Note About Personal Capital
To enroll in the Personal Capital Wealth Management plan, you’ll need a minimum initial investment of $100,000. To have regular access to financial advisors, that amount must be $200,000.
The current accounts available include joint and taxable investment accounts and Roth, traditional, SEP, and rollover IRAs and trusts. Unfortunately, you will not be able to include your 401(k) or 529 Plan. However, Personal Capital may still give you advice on these accounts.
Your portfolio will be held with Pershing Advisor Solutions, one of the world’s largest investment custodians and clearing agents. They currently act as custodians for over $1 trillion in assets all over the globe. All accounts are protected by SIPC for up to $500,000 in cash and securities and protect you against things like broker failure but not against monetary losses because of fluctuations in the market.
Of course, one of the most important features of the Wealth Management service is access to financial advisors on a 24/7 basis. You can reach your advisor via email, telephone, live chat, or even via web conference.
You will have access to two different dedicated financial advisors who will give you full financial and retirement planning help. They’ll also provide you with advice on things like college savings, insurance, home financing, and stock options, to name a few.
The Benefits of Using the Personal Capital App
As you can see, there are plenty of excellent benefits to enrolling in the Personal Capital app and services. First, you’ll have access to all your finances in one central location, making it much easier to manage your incoming assets and outgoing fees, and other costs.
The service also offers a powerful investment checkup to help you gain a clearer insight into how your portfolio is managed and what might need to change. You’ll also get support via the Personal Capital iPhone or iPad app, Apple Watch, and Android, which is all similar to the desktop edition.
The You Index from Personal Capital gives you a performance metric of all your current investments, such as stocks, ETFs, and mutual funds. It does not include cash, money market funds, bonds, and options. The entire process and setup are simple and easy to use with a well-laid out interface navigation tool.
There are no hidden fees with Personal capital, and they currently also offer a high-yield savings account. Check the current rates before applying.
Manage Your Wealth Wisely
The Personal Capital app and services provide the average investor with the insight and tools they need to succeed. Make sure you take advantage of the free tool to start with, so you can get a feel for how the service works. With constant access to skilled financial advisors, the Wealth Management feature from Personal Capital can ensure that you’re always on track as you watch your assets grow.
