The best free personal finance tool is Personal Capital. This is based off six years of testing dozens of different personal finance tools online.
Personal Capital was founded in 2011 by ex-Paypal and Intuit CEO Bill Harris. They have the best free personal finance tools on the web today. I’ve been tracking my net worth with Personal Capital for free since the beginning. I’ve successfully optimized my finances to record highs as a result of using each personal finance tool on their platform.
Personal Capital is based right here in the San Francisco Bay Area. I have personal spend spend hundreds of hours meeting with senior management. I’ve also consulted with the firm from nascent startup to an established personal finance stalwart.
Below are all the reasons why you should sign up. Each personal finance tool on the Personal Capital platform is designed to improve your wealth. It’s great for those who want free budgeting and cash flow management help along with the ability to analyze your investments and plan your retirement.
Everybody should be leveraging the internet to achieve financial freedom sooner, rather than later. You’ve only got one shot at a blissful retirement! Don’t screw it up by not tracking your wealth.
Best Free Personal Finance Tool
1) Simplicity And Less Stress. Before Personal Capital, I had to log into eight different financial institutions. I had to track over 30 different financial accounts. They ranged 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 in to the best free personal finance tool to see how everything 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. No one wants 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 and give you a historical chart of your net worth progression.
If you cannot find an account in their database, you can simply add it yourself. The best free personal finance tool will also conveniently e-mail you a weekly snap shot of your latest net worth. They also include 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!
Related: Listen to my Financial Samurai Podcast episode, The Importance Of Feeling Consistently Uncomfortable For Personal And Financial Growth
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. The knowledge from each personal finance tool will help you make smart adjustments.
Now that the stock market recovered, 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. The best free personal finance tool 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. The best free personal finance tool 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.
Start Growing Your Wealth Today
Get a handle on your finances by signing up with Personal Capital for free and aggregate all your accounts. It takes less than a minute to sign up. Once you get a handle on your finances, you can better optimize your finances. There is no rewind button in life!
If you want to use a financial tool, you might as well use the best free personal finance tool on the web today.
About the Author: Sam began 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 of investing by spending the next 13 years after college working at Goldman Sachs and Credit Suisse, two of the leading financial institutions. During this time, Sam received his MBA from UC Berkeley with a focus on finance and real estate.
About Financial Samurai: FinancialSamurai.com was started in 2009 and is one of the most trusted personal finance sites today with over 1 million organic pageviews a month. Financial Samurai has been featured in top publications such as the LA Times, The Chicago Tribune, Bloomberg and The Wall Street Journal.