Personal Capital Review: The Best Free Budgeting Tool Out There?

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Do you currently use budgeting software to help you pay your bills on time and keep tabs on your investments? Some of my friends use Quickbooks, others use Mint.com, but I have just recently found out that my rich friends use neither of these. Their budgeting tool of choice is PersonalCapital.com.

My Transition to Personal Capital

For the past two years, I have tracked my net worth via Mint.com, and quite honestly, it has been excellent. With Mint I was able to set up a budget, track each expense (no matter how I paid for it), and see an overall snapshot of my 401k investments. Most importantly, Mint provided me with an immediate update on my overall net worth (you know, that number that really matters). If I could see that this number was continuing to rise, I would feel like all was well in the world. If not, then it would be time to figure out why and immediately course-correct the situation. Mint was a very effective tool for this.

As a whole, I was quite satisfied with Mint, but then my wealthy friend suggested a new tool. And, as you may know, when a wealthy friend suggests something, it is probably wise to listen. Obediently, I decided to sign up and give their free budgeting tool a shot. My initial reaction was, “Yeah, this looks just like Mint.com.” On the left side of the page was a financial summary that showed me all my accounts and most importantly, my net worth. Beyond this though, Personal Capital began separating themselves from Mint quite handily.

The Main Reason Why Personal Capital is Built For The Wealthy

As I continued to dive into Personal Capital, I began to understand why the wealthy enjoyed using Personal Capital so much: it is because of the superior investment tools. When you log into Personal Capital, the main dashboard will show you a chart of your net worth, your income and spending, and your investment portfolio. The one I absolutely love the most is the investment portfolio. Here is a screen shot of one of my portfolios below:

20141004 - Personal Capital Portfolio

As you can see, this helpful tool will show you how much of your investments are in bonds, stocks, and cash, and will also lay out how much of each are in International funds vs. Domestic. For myself, since I am young, I would expect to see a large portion of my investments in stocks and a smaller portion (between 20% and 30%) invested in bonds. Thankfully, this is exactly what the chart is telling me!

Do you know how your portfolio is set up? Perhaps you should try this free tool and find out! You’ll be happy you did, believe me.

While this chart looks impressive all on its own, it can do even more than this. By clicking on one of the segments you see above (say, U.S. Stocks), you can dig into what types of stocks you are invested in: whether they are large cap, small cap, or mid cap. Take a look at my break out below:

20141004 - Personal Capital Portfolio - stocks

Again, since I am young, I would expect the majority of my holdings to be in small cap and mid cap stocks, and thankfully, that is exactly what I see. Of course, this makes my portfolio more volatile, but it gives me the best chance of growing my portfolio quickly in my early years.

The Importance and Ease of Re-balancing My Portfolio

Have you ever re-balanced your portfolio? If not, then you should really look into it. Let me explain why and how Personal Capital can help you decide if a re-balance should be in your future.

Let’s say that the stock market falls consistently over the course of a couple of months (oh the horror! ;)). During that time, you have consistently contributed 70% of your investment toward stocks and 30% toward bonds. The only problem is, since the stock market has been tumbling, many of your bonds have increased in value, which has turned your portfolio into 50% stocks and 50% bonds. Your portfolio allocation is askew and, if not corrected, will end up costing your a TON of money. Why? Let me explain.

Have you heard the expression, “Sell high, buy low”? Of course you have! This is exactly what a portfolio re-balance does for you. Your account used to have $100,000 in it, $70,000 in stocks and $30,000 in bonds. Because of the dying market, your stocks have fallen to $40,000 and your bonds have risen in value to $40,000. With stocks at their low and bonds at their high, what should you do at this time? That’s right, you should be buying more stocks and fewer bonds (sell high, by low)! With one simple re-balance of your portfolio (which would bring your stock/bond ratio back to 70/30), you will be in a prime position to propel your investments far above what they were before. Without the re-balance, you may not even get your funds back to what they were originally.

Thanks to Personal Capital, I can now easily see if my portfolio is balanced the way it should be. If it is out of sync, then I can simply re-balance my investments and set myself up for extreme growth.

For Those of You That Have No Idea What I Just Said

Did your eyes glaze over from the previous section of investment lingo? If yes, don’t worry, Personal Capital can help you there too. At a fee of only 0.5% of your portfolio (which is less than half of the typical cost), you can sign up with a professional financial adviser that will guide you in your investment decisions. Their advice is incredibly sound and will cater perfectly to your investment wishes.

So what are you waiting for? Sign up with your free Personal Capital account today!

To be 100% transparent, I do receive a kickback from Personal Capital for each new client sign-up, but if I received nothing, my review would still be the same (it might have had fewer links, but the recommendation would still be the same ;)). Personal Capital is an excellent tool for those that want to track their investments and become wealthy.

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Investing Make Money Money

Derek

AUTHOR Derek

My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.

7 Comments

    • That IS too bad! Maybe it’s difficult with the varying currencies? Put in a request and give it some time. I’m sure they would look into it if there was enough interest!

  1. Great review up there. These are some of the tools that one should put as a priority for personal budgeting.

    • Thanks Amos. I am absolutely loving Personal Capital and am closely watching my investments as the stock market continues to fluctuate. If my balance gets out of whack, then I am definitely adjusting my portfolio to be sure that I am buying low and selling high!

    • I bit the bullet a few weeks ago and I was obviously quite impressed. It’s pretty low risk since it’s free. 😉


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