Editorial Note: The opinions expressed are the author’s alone and have not been provided, approved, or otherwise endorsed by our partners.
Personal Capital is a robust personal finance tool that can serve as a one stop shop to manage nearly all aspects of your finances. While it began as an investment tool, it now includes tools to manage cash flow, budgeting, retirement planning, and more. Its robustness can be both a blessing and a curse. Any tool that does so many different things has a steep learning curve and will require some time to learn how to take advantage of its features.
Personal Capital gives away most of its tools for free, but reserves some tools for paying customers. Unlike advertising supported products, Personal Capital uses its free tools as a way to bring clients into its orbit and then pitch them on their investment advisory services. But, for do-it-yourself types, Personal Capital offers some of the most thorough free tools to manage your financial life.
In this review, we’ll look at the key features of Personal Capital’s financial dashboard and how you can use them to manage your money.
Personal Capital’s Financial Dashboard
To begin using Personal Capital, you link your financial accounts to its financial dashboard. The process is as simple as searching for your financial institutions within the financial dashboard and entering your login credentials to all of your online accounts. It allows you to build a complete look at your financial life, tying together all your bank, investment, retirement, credit card, mortgage, and real estate assets. It then updates them, so you’re able to see your Net Worth and track it over time.
Once you’ve linked all of your accounts, your dashboard shows a high level overview of all the pieces of your finances. In one view, you’ll see net worth, progress towards monthly budget goals, monthly cash flow, your investment portfolio balance, retirement snapshot, and more.
Cashflow & Budgeting
The budgeting features in Personal Capital are somewhat less detailed than you’ll find with other software tools such as Mint or You Need a Budget. Transactions cannot be split, so if you go to Costco and spend $300, you can’t break that down by category. Also, while it does roll up all transactions by category, there’s no feature to set budget targets to work towards.
For those who want the nitty gritty details of their spending patterns, this tool isn’t going to cut it. However, if you’re someone who has a good handle on your cash flow and just need to see the total spend monthly and track that metric, Personal Capital does the job well.
One particularly useful feature is the “Bills” page. It will show the due date for any linked accounts, such as credit cards, or mortgages. You can then one click out to those sites, so you can easily keep track of when those bills come due and pay them all from one screen and a few clicks.
Investing
The investing tools are where Personal Capital far outshines most other free tools. You’re able to see your holdings and their performance over all time periods since you linked the account. You’re also able to easily compare your performance, either overall or by specific account, to common indices, such as the S&P 500, International Markets, or the US Bond Market.
You’re able to view your overall asset allocation, which is very useful to those who have accounts across multiple institutions. You can view this either by individual account level or rolled up in total for all your investment holdings. And since many companies don’t provide enough data via their feeds, Personal Capital allows you to manually enter the holdings of anything that comes through without that information.
For example, many Target Date Funds come through as “unknown” or “unclassified” through any data aggregation. You can break this down into the actual underlying assets using the manual entry features. This ability lets you see if your portfolio has drifted from your desired allocations.
You’re able to dive into your investments by US sectors as well, so you can understand whether you’re overweight or underweight in any given area. From a diversification perspective, this helps tremendously.
Personal Capital’s Planning Tools
The Retirement Planner is a wonderful tool to allow you to see the range of outcomes for a given retirement plan. It goes well beyond the straight line calculations many free online tools provide. It undertakes a full Monte Carlo analysis, showing you both the median outcomes and the outcomes if things go poorly relative to market history.
You enter your annual savings, expected social security, desired retirement age, and retirement spending goals. Then, using your existing budget information, it projects your likelihood of being able to retire at that point. You can easily see the impact of trying to retire 2 years earlier, or what would happen if you save $2,000 more towards retirement each year. By framing all of this as a likelihood of success, users can see how small changes may lead to large differences over time.
The option to set event specific spending goals in retirement also helps illustrate the impact of gifts or vacations that alter the cash flow assumptions you’ve entered. For example, you may be considering whether you can afford to help children with their weddings. Using Personal Capital, you can enter an estimated date of the wedding, the amount you’d be willing to contribute, and then see how that impacts your overall likelihood of being able to achieve all of your goals.
Part of the Retirement Planner is a detailed cash flow table that gives a high level overview of where your portfolio could be, year by year, through the rest of your life. It shows both an average market return scenario and a poor market return scenario (10th percentile of scenarios in the Monte Carlo). With this, you can see year by year what your investments could look like, which can allow you to plan for those specific spending goals with more knowledge of how it would impact your total portfolio at those times.
Savings Planner
The savings planner tab breaks down how much cash you have saved for each account type. It also shows it by taxable, tax deferred, and tax-free accounts, so you can plan which bucket you intend to pull from in any given year.
One of the most unique features of Personal Capital is its tool that shows how much savings is needed each year to reach a specific likelihood of success on the Monte Carlo similar. For those who are more conservative and want to plan for a 90% likelihood of success, it computes for you how much you’d need to be at that level.
Conversely, for those who have more flexibility in their future plans or who are okay with having a less secure pathway to retirement, you can set the calculator to calculate a 50% chance of success, and see how much less you would need to save annually.
As with many of the other parts of Personal Capital, the features are robust and allow you to tackle a problem in multiple ways. It’s great to either be able to enter how much money you can save each year and see how likely that is to get you to your goals, and to set the percentage Chance of Success and have it calculate for you how much you need to save. Either one without the other can feel like a bit of a guessing game, so having both options allows multiple ways of determining how much you need to save.
Retirement Fee Analyzer
The retirement fee analyzer helps show the impact fees, either from a financial advisor or from funds themselves, can have on your future retirement. For those who have already optimized into using low cost index funds, this can help show that they’re well on their way to retirement with the vast majority of the money they’ve saved staying with them. For those who are in high fee investments currently, this reveals those costs not just in percentage terms, but also in dollars terms as the impact compounds over the decades.
The tool pulls in data automatically from any funds it can. For those it can’t pull in, you’re able to manually enter that yourself. This is useful for a 401k, which may have fees other than the fund expense ratio tied to the account.
There’s also the option to enter the annual advisory fee, if you currently pay a financial advisor for management of your accounts. By including this, Personal Capital lets you see the impact that fee can have on your likelihood of success long term, and thus let consumers have another way of making sure they feel they are getting full value from advisors.
Of course, Personal Capital is an investment advisory business, so this could also be a means of showing how their fees are lower than what someone is currently paying, and then to send the user offers to connect with advisors who work for Personal Capital.
Is Personal Capital really free?
Yes and no. The financial dashboard we’ve reviewed here is free. If you choose to engage Personal Capital to manage your investments, there is an advisory fee.
Is Personal Capital safe?
As with any online financial services firm, there are risks associated with logging into your accounts. In the case of Personal Capital, you are logging into your banking and investment accounts through the Personal Capital website. This requires you to enter your login information for your financial accounts.
To protect your data, Personal Capital encrypts your data with AES-256 with “multi-layer key management, including rotating user-specific keys.” It also uses two factor authentication when users are logging into their accounts.
Final Thoughts
Overall, the tools offered by Personal Capital are a huge leap from most online options. You can do significant planning around your finances, both in the present and the long term future. It’s not a tool for those just beginning their personal finance education, but for those comfortable making big investment decisions on their own, Personal Capital is a great resource for you to use as you plan your long term financial life.
Related: The Best Cash Management Accounts
Forbes adheres to strict editorial integrity standards. The content on this page may contain partner offers and/or affiliate links, and Forbes may receive compensation if you click through a link on this page. To the best of our knowledge, all content is accurate as of the date posted, though offers contained herein may no longer be available.
