The best financial tool online is made by Personal Capital. Personal Capital wins after extensive research of over 10 other financial tools online.
From 1996 – 2012, I used an Excel spreadsheet to track my net worth. Then I decided I no longer wanted the burden of tracking every single one of my 40 different financial accounts every single month.
Given I’ve lived in San Francisco since 2001, I began looking around for home grown financial technology companies for a solution.
The best free financial tool online is:
2) Easy to use
4) Accessible on every device
5) Preferably free
With these five criteria in mind, my conclusion after testing over a dozen products and meeting with management of over a dozen financial technology companies is that Personal Capital, founded in 2011 by the former CEO of Intuit and Paypal, has the best free financial tools today.
I liked their free financial tools so much that I consulted with them part-time between 2013-2015. I even became a shareholder of their company because I strongly believe their product will help Americans manage their money better for a stronger financial future.
Personal Capital: Best Free Financial Tool Online
Total Equity Funding: $200.3M in 7 Rounds from 11 Investors as of 2H2020.
Headquarters: Redwood City, California with offices in Denver and San Francisco
Description: Personal Capital is the leading digital wealth management firm.
Founders: Bill Harris, Louie Gasparini, Rob Foregger
Categories: Financial Services, Wealth Management, Finance, FinTech
Free Sign up link: Personal Capital
Contact: email@example.com | (855) 855-8005
Employees: ~450 as of 2H2020
Personal Capital Management
Best Financial Tool Reeasons
Personal Capital has 2 million registered users who track over $80 billion using their free app! I highly encourage you to download and use their free app as well.
1) Simplicity And Less Stress. Before Personal Capital, I had to log into eight different financial institutions to track over 30 different financial accounts ranging from brokerage accounts, money market accounts, CD accounts, checking accounts, IRA, and my 401K. My finances were a mess, and I’m sure your finances could use some organization as well. Now I can just log into Personal Capital to see how everything is doing in one place. It’s important to have a holistic view of your overall financial health so you know where to allocate resources.
2) Net Worth Overview. Gone are the days where you have to use an Excel spreadsheet to manually update every single asset and liability line item to calculate your net worth. Personal Capital updates your net worth automatically as soon as you log in because all your accounts are linked. They provide a pie chart of your assets as well as gives you a historical chart of your net worth progression.
If you cannot find an account in their database, you can simply add it yourself. Personal Capital will also conveniently e-mail you a weekly snap shot of your latest net worth along with how the markets did, upcoming bills, latest insightful blog posts and accounts that need your attention. Below is a sample headline snapshot.
3) Tracks Your Cash Flow. Budgeting is personal finance 101. By tracking your income and your spending like a hawk, you will be able to save a lot more money than if you simply tried to guess everything. Think about all the times you withdrew cash from the ATM machine and had no idea where all the money went a couple days later.
Aggregating all your accounts allows you to see where all your money is going. In the example above, this entrepreneur brought in over $38,000 in income and spent only $3,096. Now that’s great cash flow!
4) Helps You Balance Risk. With so many accounts, it’s often hard to see exactly what’s going where. For example, so many people were too overweight stocks before the financial crash in 2009. With Personal Capital, you can easily see where the imbalances are in your net worth so you can make smart adjustments.
Now that it’s back to bull markets as the S&P 500 has recovered from the scary March 2020 sell-off, investors are probably too overweight equities and way underweight bonds once again.
The Investment Checkup tool analyzes your portfolio’s holdings based on size, style, and sector. Personal Capital excels for those who have assets in the stock market. Personally, I like to maintain a 35%, 35%, 30% split between stocks, real estate, and CDs/bonds.
5) Helps Reduce Fees. One of my favorite tools Personal Capital provides is their Portfolio Fee Analyzer. I ran my 401K through their fee analyzer and discovered that I am paying over $1,750 a year in management fees. I had no idea that my Fidelity Large Cap Growth fund cost $1,200 a year due to a 0.74% expense ratio compared to sub 0.3% for my Vanguard Funds. As a result, I found a similar Large Cap index fund instead and am now saving $1,000 a year.
Without Personal Capital, I would have spent over $87,000 in excessive fees over the next 20 years. Take a look at my example below. Portfolio fees are a serious problem which will rob you of your retirement wealth if you are not careful. Don’t let ignorance rob you of your financial well being.
6) Shows Your Portfolio’s Investment Efficiency. Based on your risk tolerance and investment objectives questionnaire, Personal Capital will give you an idea of where your current allocation is on the Efficient Frontier Curve. The Efficient Frontier Curve is the best returns for a certain level of risk. You want to be on the curve and not above or below.
7) Recommends Specific Dollar Amounts To Invest. Financial advice is useless if there is no actionable advice. Personal Capital will recommend the specific dollar amounts to invest or reinvest in each asset class to get you to an optimal asset allocation. In this example below, the investor is too heavily weighted in cash.
In order to get to his recommended target allocation the investor needs to increase stock holdings by roughly $200,000 and bond holdings by roughly $100,000. The fun part is figuring out which index funds to invest in each category. All investment related charts and analysis can be found in the Investing tab.
8) The Best Retirement Planning Calculator. Personal Capital has the best retirement calculator on the market because it uses real data and Monte Carlo simulations to come up with the most realistic financial scenarios for your future. Other calculators simply ask you to guess input values to then come up with your financial future.
The problem with this method is that we often underestimate how much we are saving and spending. You can input different life events such as a wedding or home purchase in your cash flow statement and recalculate your financial future to see how you’ll do. Everybody should give it a try.
Best Free Financial Tool Online
Get a handle on your finances by signing up with Personal Capital for free and aggregating all your accounts. The financial management tools are free, takes less than a minute to sign up, and allows you to even find a personal financial advisor if interested. I spent the past 13 years meticulously tracking my own finances to achieve financial freedom.
If I discovered Personal Capital earlier, I think I would have reached freedom even sooner! But I’ll settle with leaving the workforce permanently at age 34 to be free.
About the Author: Sam has been investing his own money ever since he opened an online brokerage account in 1995. Sam loved investing so much that he decided to make a career out it by spending the next thirteen years after college working at Goldman Sachs and Credit Suisse Group. During this time Sam earned his MBA from UC Berkeley with a focus on finance and real estate. In 2012 Sam was able to retire at the age of 34 largely due investments that today generate roughly $220,000 a year in passive income.
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