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- Personal Capital
- Personal Capital is a robo-advisor with a paid component and a free version.
- The free version of Personal Capital can help you figure out how much you’re paying in fees and determine whether you’re on track to reach your retirement goals.
- Personal Capital’s net worth tracker makes it easy to track the ultimate measure of your wealth – your net worth.
When it comes to personal finance, I mostly stick to old school wealth-building and expense-tracking strategies. I budget using a pen and paper every month, I invest most of our money into inexpensive index funds with Vanguard, and I rarely rely on technology or apps to manage my spending or investments.
The one big exception I make is with Personal Capital – one of the three most popular robo-advisors (along with Betterment and Wealthfront). While I don’t pay Personal Capital to manage my investments for me, I do love the free version they offer to anyone who signs up and creates an account.
Here’s why I take advantage of this Personal Capital’s free resources and tools:
Personal Capital makes it easy to track your net worth
Net worth is one of the most important measures of any person’s wealth. This figure, which is determined by taking your assets and subtracting your liabilities, helps you monitor your growing wealth as your assets increase and your liabilities and debts increase. It’s not enough to simply monitor your investments if you’re not also tracking your liabilities, and your net worth takes both into account.
You can track your net worth easily with Personal Capital once you take time to input all your loan, banking, and investment account information. Your net worth will automatically update as your account balances change as well, making it easy to note your progress without running the numbers yourself.
Get access to free tools
Personal Capital offers several free tools you can use to grow more wealth. Their investment checkup tool asks important questions to come up with your ideal asset allocation, for example. Personal Capital also offers a cashflow tool that can help you see where you’re spending and allocate all your purchases into spending categories you can track.
Meanwhile, their retirement planner looks at your current investments and projected returns to figure out if you’re on track for retirement. This tool lets you play around with certain figures like your annual retirement savings, anticipated average return, and Social Security payments to see whether some simple changes could help you reach your goal faster.
Figure out your fees
Another important feature Personal Capital offers for free is their retirement fee analyzer. This tool analyzes your retirement accounts and fees to see how they compare to the benchmark. It also helps you discover and consider hidden fees your financial advisor or broker may be hiding.
Since I invest almost entirely with Vanguard, my investing fees work out to 0.13% on average – or less than a third of the benchmark (0.50%). That’s great and all, but this is something I plan to monitor over time to make sure it doesn’t change.
If your retirement account fees are too high, Personal Capital will show you this fact plain as day. They also estimate how many years of retirement you’ll lose to fees over time. All you have to do is create an account on Personal Capital and link your investment accounts. It’s as simple as that.
Signing up is free
Have I mentioned that Personal Capital is free? The robo-advisor does offer a paid version that includes personalized advice and wealth management. However, you don’t have to pay to belong to Personal Capital or access their free tools.
If you do decide to pay for investment and wealth management advice with Personal Capital, you will likely find its fees very affordable. For accounts up to $1 million, you pay a flat, all-inclusive annual management fee of 0.89%. There are no hidden fees on top of that amount, and there are no trailing fees or commissions on trades.
Log all your investment accounts in one place
Another benefit of using Personal Capital is the fact you can see all your accounts in one place. You can log in once to see your loan amounts and investment accounts and how they have changed over time.
This is a huge advantage if you value your time. Imagine how cumbersome it would be to manage your investments if you had money with several different brokers. You would need to log into each one to see how your account has performed, and you wouldn’t have any way to see how each one stacks up side by side. Personal Capital solves that problem by connecting all the dots and providing a one-stop platform where you can see all your financial details in one place.
The bottom line
If you need some retirement help but aren’t sure you want to hire a financial advisor, signing up for a free account with Personal Capital is a smart first step either way. Creating an account gives you access to their free tools without any pressure, and you can decide later whether you want their paid services or not.
At the very least, you can use Personal Capital’s retirement planner to see if you’re on track to reach your goals. If not, you can also play around with the inputs to see what changes you make now, if any, could improve your chances of retiring when you want.
Of course, knowing your investing fees is another big part of the puzzle since overpaying for investing advice and professional management can eat away at your returns every year. Personal Capital makes outrageous fees obvious so you can take steps to get them in line.
It’s hard to find anything that is actually “free” these days, but Personal Capital offers all these resources without any payment or commitment. That’s pretty amazing, and it’s also why I will never stop using my free account.