Personal Capital is an exceptional wealth management tool, with tons of useful features for everyone. Some of its services are for high net-worth individuals only, but it has a multitude of uses that everyone can appreciate. Whether your finances are becoming more complicated and you need more tools to manage it, or it’s gotten to the point where you need advisors, personal capital has benefits for you!
Let’s Get The Expensive Features Out Of The Way
With a minimum balance of $100,000, and a management fee of .89%, you can access some of Personal Capital’s premium features. With that you get access to financial advisors and tons of ways to optimize your taxes. All of these financial tools are great for anyone with a high net worth. Depending on how much you have, the fee can be lowered to as little as .49%. They use a “smart weighting” system for investments, which helps diversify your portfolio by weighing style, size, and sector more equally.
This helps them have more stable investments, with better long-term returns than many traditional index funds. Usually I’m averse to claims of outperforming index funds, but it sounds like they may be on to something in this case. For example, if you create a diversified portfolio of index funds, you’ll likely outperform most individual index funds over the long-term, with lows that aren’t nearly as bad – at least in theory (it is a case by case basis, it ultimately depends on the funds chosen and the future market).
Smart weighting, coupled with tax optimization, access to dedicated advisors, and great rebalancing make for some top-notch premium features. If you have a lot of money to invest, I can’t think of a better option than Personal Capital if you’re looking for advanced features and services.
Why Am I Recommending Personal Capital For Everyone If All Of Those Features Are Only For Affluent People?
Well, I started as a user of Personal Capital, and now (for full disclosure) I am an affiliate. I get some money when people with a large net worth link accounts to it. So, if you click on my links to Personal Capital, create an account, and link 6 figures worth of cash, I do get a little “finder’s fee” of sorts – to keep the site running. However, whether you have a high net worth or not, I recommend Personal Capital (remember, I get nothing for people who just use the free features). Its free features alone are fantastic, and I think the average person trying to work on their finances will appreciate them.
Now, why did I say all of that? For starters, I think full disclosure is important. Additionally, I want to emphasize how much I love the free features and that I recommend Personal Capital whether I get anything from someone signing up or not.
How To Start Using The Free Tools
So, to use the free tools you’ll have to link at least one bank or investment account (preferably more, to get the most use out of it) to your Personal Capital account. This process is pretty easy and only takes a few minutes, maybe a little bit longer if you have an abnormal amount of financial accounts to link. Once you have that linked, the tools can start pulling data for you!
Portfolio Analysis
If you haven’t started investing yet or are new to it, you should check out my guide on getting started here. The analysis tool looks at the different asset classes your portfolio is split between (US, International, stocks, bonds, etc.). Personal Capital lets you look at your total investment portfolio (with a nice graphic to boot) so that you can see all of your investments in ONE place. If you’re new to investing, that doesn’t sound like a big deal, but once you start having several accounts this type of tool makes life a lot easier.
Fee Analysis
On top of the portfolio analyzer, you can use Personal Capital to view your fees and how they may be affecting your long-term results and expectations. If you’re worried about hidden fees, this can help you “uncover” them.
Net Worth
Personal Capital helps you easily maintain a clear snapshot of your overall financial position. It combines account balances, debt, investments, and property values to give you a solid estimation of your net worth. Clearly, if you don’t link all of your accounts it won’t be accurate, but it still has uses nonetheless – it’s a snapshot of everything you’ve linked to Personal Capital.
Cash Flow
If you’re just starting out, or trying to get your finances together, this tool will be particularly useful for you. It automatically takes all of your income and expenses, then displays your cash flow in some more (much-appreciated) easy to read graphics. In other words, it lets you know how much money you’re gaining or losing every single month. It’s a useful tool to keep an eye on. If you want to do well, the priority should be to never spend more than you earn so that you can start setting yourself up for financial success.
Budgeting
Using Personal Capital, you can set a monthly total budget, modify the date range, and view all transactions. Better yet, the transactions will be listed by the category and merchant of the expense.
Pros Of Personal Capital
- The app, and many of its features, are free
- It has a great user interface with an intuitive design and easy to understand graphics
- It has two-factor authentication for added security
- Covers many standard financial tools as an all-in-one solution
- No hidden fees or costs – they are very transparent about their business model
Cons Of Personal Capital
- Some really nice features have a large minimum of linked investable cash
- A high fee for the advanced features (although, I’d still argue it is worth it)
- While the budgeting tool is nice (especially when coupled with the other free tools) it is not the best on the market
Is Personal Capital A Good Choice For You?
Ultimately, whether something like Personal Capital is good for you ultimately comes down to your personal needs and goals. If you aren’t happy with your current financial tools, or are looking for tools to use, I’d definitely recommend trying out Personal Capital since their free tools are pretty comprehensive. However, if you’re trying to use the advanced features that aren’t free, there are a few caveats.
You’ll need at least a $100,000 investment to get started, and as I said earlier, there is a .89% management fee (which can be lowered to .49% based on how much you’re investing). Considering what you get with the advanced features, it is probably worth it – but most people won’t be able to afford the minimums.
Conclusion
Personal Capital is absolutely great in my opinion, and its free tools provide an all-in-one solution, since it doesn’t require members to use the advanced wealth management services. Its portfolio analysis coupled with its cash flow and net worth monitoring are a must in everyone’s toolbox. If you can afford it, the advanced features are also stellar and generally worth the cost. No matter your financial situation, Personal Capital has something to offer you.
If you think I missed something, or want to add something else about Personal Capital, let us know in the comments! For more content like this, and a free budgeting template and financial goals worksheet, be sure to sign up for the Bitter to Richer newsletter.
