A few months ago, my wife and I opened a new chapter in our financial journey as we resolved to make 2019 the year we learned more about investing. Whether I was reading books on the subject or exploring other blogs for advice, there was one recommendation I came across again and again: Personal Capital. Finally, in conjunction with me opening my first “real” brokerage account, I also set up a Personal Capital account for myself. In doing so, I now finally understand why so many of my fellow bloggers utilize this tool to track their financial lives.
So what makes Personal Capital’s free tools so great? Let’s take a look at what they have to offer.
Setting Up Your Personal Capital Account
About Personal Capital
I should probably mention that, unlike many personal finance apps, Personal Capital is actually a wealth management and investment services firm that just so happens to offer some free tools. Because of this you may see mentions of their other services as you explore the site. But have no fear as everything I’ll be covering today really is free to use regardless of whether or not you use their other services (I don’t).
Creating an account
Signing up for Personal Capital is a relatively painless process. To create an account, you’ll provide an e-mail address, create a password, and offer a phone number, which they say will be used to “verify new devices for security purposes.” After that you’ll also be asked for some basic info such as your name and age. With that complete, you’ll be ready to start linking your accounts and using Personal Capital’s free tools.
To get the full benefits of what Personal Capital offers, you’ll want to connect as many of your bank accounts, brokerage accounts, and other financial accounts. To do this, you’ll be asked to log into each of the accounts you’d like to link. In most cases, you’ll likely also be required enter a registered e-mail address or phone number and enter a code sent to you so that your account provider can confirm it’s really you requesting to login.
Anyone who’s ever tried to link multiple bank accounts to apps like Mint knows that going through all of the steps one at a time can be time-consuming. That’s why I really appreciated that Personal Capital allows you to add an account by logging into it but then moving the account to the sidebar for you to complete the two-factor authentication. In other words, this made it so you could get started with adding the next account before finishing up the last. Of course you will need to keep an eye on that left sidebar as two-factor authentication texts tend to have time limits.
Like other apps that utilize account linking, there will undoubtedly be times when you need to reconnect these accounts. Moreover there are some institutions that seem to be needier than others, such as my Aspiration account requiring me to enter a texted code pretty much anytime I log into Personal Capital. Once again, thanks to Personal Captial’s layout, these reauthorizations are far less annoying than they are in some other apps and don’t present too large a problem in my experience.
Personal Capital Features
Net worth tracking
One of the most visible and prominent tools that Personal Capital offers is net worth tracking. When you link your various accounts, you’ll see this number posted at the top of the left column along with your total assets and liabilities. For me, tracking this figure has been motivating and helps give me a better idea of where I stand financially, beyond any single account or type.
Budgeting and savings
On your main Personal Capital dashboard, you’ll see several widgets you can customize to monitor a budget, track your cash flow, and more. There’s also a tool that will show how large your emergency fund should be (you may also get a nice message congratulating you on your savings should you surpass that amount).
Clicking on “Budgeting” will show you on a chart how your spending in the current month compares to the prior month (or whatever timeframe you select). It will also display a breakdown of what categories make up the largest chunks of your spending. Furthermore, tapping a specific category will then show you your top spending spots. For example, it’s no surprise that Starbucks was my largest expense under “Resturants.”
Below that you can view recent transactions, re-label purchase categories if need be, and hide duplicates. There are also tags you can add to transactions including “business,” “reimbursable,” “medical,” and “tax related.” You can sort tagged transactions by tapping the “Tags” column.
For those seeking the ability to create a customized budget and set spending caps for each category, Personal Capital might not be the best option. That said, for my needs and my non-budget budget, these features are perfect.
While apps like Mint also provide net worth and budgeting tools, to me, what makes Personal Capital stand out is their emphasis on investment tools. This starts with the Portfolio section where you can monitor movement in your accounts. What’s more, instead of merely viewing account balances, you can also look at the individual stocks or funds that make up a given account to see how each of them is performing. Naturally there are plenty of charts you can peruse as well, giving you visual representations of your portfolio’s performance.
Perhaps the coolest feature here is the fee assessment tool. As it would imply, this allows you to easily view how much you’re paying in fees among your retirement accounts and, furthermore, how much of your returns you could be sacrificing. This can be truly eye-opening and encourage you to find less expensive options. In fact, after taking a closer look, I decided to move my IRA to another fund.
Admittedly, I have yet to truly explore all that Personal Capitals free tools have to offer. There are so many rabbit holes you can go down when exploring all of the different charts, comparisons, and customizable planners they pack in. Therefore, while these are a few of my favorite features, you can surely find the perfect tool for your needs as well.
Personal Capital Cash
I’d be remiss if I didn’t mention that Personal Capital recently launched its own savings account. Currently the big selling points of this account are that it carries no fees and pays 2.30% APY. That narrowly bests SoFi Money’s 2.25% but sits below the also-relatively-new Wealthfront Cash Account, which pays 2.51% APY.
Given the small APY differential between SoFi Money and Personal Capital Cash and the fact that I already have quite a few bank accounts, I haven’t bothered to sign up for this offering yet. However, should you choose to, the site does make it easy to reach the application. When logged in, just go to the Banking tab and select “Open an Account.” According to the FAQ, accountholders can then manage their deposit and withdrawals through their Personal Capital dashboard. In other words, if you’re looking for a better place to store your money and don’t need any checking or ATM access, this might be a decent option for you.
Final Thoughts on Personal Capital
As a newbie investor, Personal Capital has been an incredible asset to me. In my mind, I see it as a “Mint 201” for those who have graduated from needing more budget-specific help to requiring investment-focused tools. Plus, while Personal Capital’s dashboard makes it easy for me to access the tools that are most important to me right now, I can also see that there are plenty more features that will likely suit more seasoned investors.
For all of those reasons, I’m glad I finally looked into what all the hype was about and made Personal Capital a part of my financial toolbox.
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Originally published at Dyer News.