The best free financial tool online for 2021 and beyond is made by Personal Capital. Everybody should sign up to help track and boost their net worth.
There is a ton of free financial tools online to choose from. But after testing out several dozen free tools, I've come to the conclusion that Personal Capital has the best free financial tools today. The app is:
2) Easy to use
4) Accessible on every device
Personal Capital, founded in 2011 by the former CEO of Intuit and Paypal, has over 1.5 million registered users tracking over $900 billion in assets under management. The more you can measure your net worth and stay on top of it, the better you can grow your net worth.
Best Free Financial Tools Online: Personal Capital:
Total Equity Funding: $220.3M in 7 Rounds from 11 Investors as of 2021. Purchased by Empower in 2020.
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: firstname.lastname@example.org | (855) 855-8005
Employees: ~400 as of 2021
Personal Capital is an online investment advisory platform that provides its clients with electronically facilitated wealth management services, objective advice, and strategies. The company's fees are based on a percentage of assets managed by the platform, including wealth management, trade costs, and custody.
Personal Capital summarizes its users’ bank accounts, credit cards, mortgages, and other financial details together in one place. The platform also highlights its users’ long-term fiscal health over month-to-month spending with tools such as a visual graph of their investment allocation and a 401(k)-fee analyzer.
Personal Capital Management 2021
Eight Reasons To Use Personal Capital
1) Peace of Mind.
The best free financial tools online provide peace of mind. 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 Tracking.
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.
See: The Average Net Worth For The Above Average Person
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) Cash Flow Management.
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 markets have rebound after the scare in March 2020, 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) Reduce Fees Portfolio 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.
See: How To Reduce 401k Portfolio Fees
6) Portfolio Analysis.
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) Investment Recommendations.
The best free financial tools online provide actionable tips. 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) Great 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.
Take Control Of Your Financial Future
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.
Take control of your financial future!
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. He spent 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. He spends time playing tennis, hanging out with family, consulting for leading fintech companies, and writing online to help others achieve financial freedom.
FinancialSamurai.com was started in 2009. It is one of the most trusted personal finance sites on the internet with over 1.3 million organic pageviews a month and growing. Financial Samurai has been featured in leading publications such as The Wall Street Journal, Bloomberg, and The LA Times. The Best Free Financial Tools online is a FS original.