It’s tough keeping track of all of your money and investing accounts.
It’s not impossible, for sure, but it can be a pain switching between accounts to see exactly what you are invested in for which account.
Wouldn’t it be great if you had one place that can give you a snapshot of your money?
And then wouldn’t it be awesome if you could get a better idea of your allocations to better make sure you are diversified in the right places? Oh, and if you could see what your fund fees were costing you in one spot that would be nice too, right?
Some objective financial advice based on your accounts would be a sweet thing to have access to as well, wouldn’t it?
Enter Personal Capital.
Personal Capital describes itself as “Your Next Generation Financial Advisor”, and it may be just that.
Not only does the application allow you to combine your various financial accounts in one place, but it also provides expert, personal investment management with low fees.
What Personal Capital does
According to the Personal Capital website, the program provides “comprehensive and objective wealth management solutions for people with complex financial lives.”
The system allows you to track your total net worth in all of your accounts in real time.
That includes your checking, savings, investment, and retirement accounts, as well as any loan accounts including mortgages. You can get the big picture on all of your financial accounts as though they were a single account.
They also set you up with a personal financial advisor who will help guide you through the investing process with the company.
Personal capital uses “military-grade encrypted algorithms” that enable you to quickly and easily identify suspicious transactions in your accounts.
The program has various applications that not only allow you to track your investment performance, but also to make projections as far as both long- and short-term investment performance, as well as potential tax consequences.
Personal Capital benefits
You can sign-up for Personal Capital and link your accounts for free.
This places all of your accounts under a single account where you get real-time information and know at all times exactly what your financial position is.
You can check the performance of your entire portfolio in one place. Take a look at how diversified your investments are. With one click you see get exact percentages of each asset class in your portfolio.
The company bases your investment portfolio primarily on exchange traded funds (ETF’s). They have lower fees than many mutual funds and certain advantages when it comes to income tax.
However, in using ETF’s as a base Personal Capital will also include various stock holdings in addition. This is part of their approach of using Tactical Weighted Portfolios. This helps to offset index funds that may be too heavily weighed in favor of certain stocks. Their analysis has shown that this investment strategy produces better long-term results.
The strategy also uses global multi-asset class diversification, which includes a 70% to 75% mix of US equities, and 25% to 30% in foreign equities, most of which is from emerging markets.
As to the fixed income position, Personal Capital uses FDIC insured accounts at EverBank (here’s our review of EverBank). In these accounts, you’re guaranteed to earn rates that are in the top 5% of competitive accounts from leading banks. With a minimum of $1,500, you can invest in money markets, savings, and certificates of deposit (CDs).
The fixed income position also includes a mix of Treasuries, Treasury Inflation Protected Securities (TIPs), Agencies, Corporate Bonds and International Debt.
To serve as an inflation hedge, Personal Capital use investment alternatives, including real estate, gold and other commodities.
You’ll also have access to Personal Capital’s Universal Checkbook. Enroll one of your checking accounts by taking a snapshot of a paper check. Once enrolled you can use their account to send money anywhere on your smartphone or tablet.
Speaking of mobile, you have Personal Capital’s mobile apps at your disposal so you can check in on your accounts anywhere.
Personal Capital fees
As indicated above, you can sign up for a Personal Capital account and begin linking your accounts for free.
Personal Capital uses a single fee to keep investing simple. The fees are reasonable when compared to the typical fees charged by personal investment advisors. Like most investment services, the fees you pay are tiered based on the amount of money under management:
- First $250,000, 0.95%
- Next $250,000, 0.90%
- Next $500,000, 0.85%
- Next $4,000,000, 0.80%
- Above $5,000,000, 0.75%
Fees for 401(k) plan management start at .50%.
Is Personal Capital worth checking out?
What’s impressive about Personal Capital is their strategy of using a holistic approach to investing.
This takes your entire financial situation into account when deciding on asset allocations. This is important as you probably have more than one investment account, including retirement accounts, that should be synchronized. This will enable you to achieve true balance and diversification in your holdings.
The company also has a strong emphasis on real diversification.
They take the approach that you should “own some things that zig as others zag.” This can be especially important during bull markets when there is a strong human tendency to load up on the winners. Should the market turn, you’ll be better prepared with solid alternative investments.
Ever try to keep track of multiple investment accounts? It can be a pain following what funds are in each account to make sure you don’t over-allocate in any one sector. With Personal Capital you have all of your accounts under one umbrella so it’s easier to manage.
The low management fees, and absence of transaction fees, aren’t hard to take either. The single fee enables you to better project what impact fees will truly have on your long-term investing results. You also aren’t getting hit with a barrage of trading fees every time you make a trade.
The company has no ties to large investing firms that may lead to pushing the sale of certain investment products that may not be the best for your portfolio. The investment advisers are not compensated differently based on your holdings. That allows for true objectivity in a way that doesn’t always happen with investment management companies.
Personal capital is worth checking out, especially if you move into the intermediate investor range of $100,000 and up. This is where investing, and finances in general, often start to get complicated and unnecessary fees begin piling up. That you can see all of your accounts in one place is a huge benefit in trying to manage your money and investments.
Have you had any experience with Personal Capital?