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My Overdue Portfolio Checkup

by retirebyforty on October 19, 2012 · 30 comments

in investing

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Disclosure: I am not a financial advisor and I don’t even play one on TV. I’m just a regular Joe investor who consistently added to our stock market investments over the years. My best investment choices were to start investing early and to stay in the market during the down turns.

I made many investing mistakes in the past and I’m still making mistakes today. My problem now is that we have too many accounts and too many investments to keep track of. Currently I have about 20 individual stocks and 14 mutual funds/ETFs. In 2010, I wrestled the portfolio down to about a dozen individual stocks and 7 funds. After a couple of years, our portfolio got messy again and it’s getting more difficult to keep track of all the investments.

It’s important to do a complete check up on your investment portfolio at least once a year. I have been sticking to my asset allocation plan, but some of my investments do not fit my situation anymore. This was brought to my attention by Personal Capital after I signed up and linked my investment accounts.

Before I get into Personal Capital too much, I want to briefly talk about Mint and Morningstar.

Mint

I have been manually keeping track of our portfolio and it’s difficult to figure out the asset allocation of so many accounts and investments. I was hoping Mint could tell me our asset allocation, but they are extremely deficient in this area.

annual investment checkup

This chart is not helpful at all.

Mint is good for budgeting and expense tracking, but they have a long long way to go to compete with Morningstar Instant X-Ray.

Morningstar Instant X-Ray

portfolio checkup review

Morningstar Instant X-Ray has been one of my favorite tools on the internet for many years now. You manually input your holdings and it will show your asset allocation, fees, geography, and more. You can save your portfolio, but when you trade, you need to update it manually.

Personal Capital – online financial advising

Personal Capital is a new site that analyzes and keeps track of all your investment in one place for free. The site combines what I like best from Morningstar and Mint in one place so I thought I’d give them a try. I just signed up with Personal Capital last week and linked all my investment accounts. There are a few problems, but I’m working through them with tech support. It seems like they are not as mature as Mint yet with linking accounts. I’m sure they’ll get everything working at some point.

  • My 401(k) has a company matching portion. This portion of my 401(k) has some restrictions and it is invested in a “Global Diversified” fund that doesn’t have a ticker symbol. Since it doesn’t have a ticker, Personal Capital can’t parse it out like other mutual funds. This is the main reason why I need to roll over my 401k. After I roll it over, I will be able to invest it anyway I want.
  • I couldn’t link my Prosper account because they are not in Personal Capital’s database.
  • I couldn’t link our CIT saving account and another super secret retirement account.
  • I was able to link our accounts from Fidelity, TDAmeritrade, Firstrade, ING, Umpqua bank, Oregon 529, and my credit union.

Anyway, I really like what I have seen so far. Once I work through these few issues, I will be able to get an accurate picture of my asset allocation anytime I want.

free online financial planning asset allocation

Here is the asset allocation screen. It’s a bit off right now because there are a few investments with no ticker symbols. Everything with no tickers is lumped into “Unclassified.” Cash seems a bit off as well; I think it’s not counting our saving accounts. I need to ask tech support about that.

With Personal Capital, you can mouse over each investment category to see a break down. In this picture, I can hover on U.S. stocks to get the morning star style box. It’s showing that I have about 10% of my net worth invested in Large Cap Core. I can move the mouse to Mid and Small caps to see the percentages there too. The International Stocks section is subdivided into Emerging and Developed markets.

Investment Checkup

It can be daunting to start investing in the stock market and Personal Capital can help with this. You input your age, retirement target, and  risk tolerance, and let the software analyze your portfolio.

free financial adviser online

Allocation

From your Target, they will come up with an asset allocation plan and compare it to your investment portfolio. You can see in the Allocation section that they flagged our US Stocks holding to be 25% underweighted. (This is a bit off due to the ticker problem I mentioned earlier.) Of course, this is just an algorithm, but I would have loved this tool when I first started out. You can enter an investment manually before trading to see how it affects your asset allocation. This could be very helpful to beginners.

Michelle,the  financial adviser pictured, contacted me and we set up a financial planning appointment next week. From what I understand, we will go over our portfolio and see if the asset allocation makes sense. The first appointment is free. I’m not sure about more appointments after that, I will ask her and write a follow up in a couple of weeks.

Risks

They identified a couple of risks in our portfolio. I don’t think these are big risks, but I’ll keep them in mind when I roll over my 401(k).

  1. Our domestic stock portfolio has almost no exposure to Mid Cap Growth and Mid Cap Value.
  2. Our portfolio contains little or no exposure to inflation protected securities (bonds.)

Costs

free portfolio checkup

Yeap, we are paying $1,754.91 per year! These fees will add up to more than $80,000 over the next 20 years. I knew most of these fees come from 2 mutual funds – PENNX and FLPSX, but seeing this chart gave me the kick in the pants to really do something about it.

PENNX (0.90% expense ratio)

We have had PENNX for quite a while and it provides small cap diversification for us. However, we also have VB which is a small cap index ETF from Vanguard. VB offer similar diversification and has much lower expense ratio (fee) at 0.10%. I should have converted PENNX to VB a while ago, but it slipped pass my radar. Inertia is a strong force to overcome. PENNX did well for us, but now there is a better choice that fits my current investing philosophy better.

FLPSX (0.88% expense ratio)

FLPSX is in my 401(k) and provides mid cap diversification. Now that I don’t work for a corporation anymore, I should roll over my 401(k) and reinvest in low fee Vanguard funds. I will do this before the end of the year and should be able to reduce the fee here, too.

Once I move these investments to Vanguard funds, our yearly fee should be reduced to less than $1,000. As you can see from the chart, this will have a big impact over 20-30 years.  I will also take this opportunity to consolidate our portfolio and reduce the number of investments. The mutual funds/ETF portion of the portfolio should be mostly on auto-pilot so I don’t have to worry about them. That way, I can concentrate on managing our dividend stock holdings.

I like Personal Capital

All in all, I really like what I have seen so far. Personal Capital doesn’t roll off the tongue like Mint does, but I like it much more than Mint because it’s geared toward investors. If you have 10 or fewer stocks/funds, it’s probably easier to use Morningstar Instant Xray. However, if you have more than that, I recommend that you give Personal Capital a chance.

How do they make money?

A local financial adviser will cost you a pretty penny to come up with a financial plan. How can Personal Capital provide this for free? Personal Capital offers Investment management service for a fee (a bit less than 1%.) Their goal is to convert free users to paid users. I’m not exactly sure how they’ll do that and I’ll ask Michelle when I talk to her. I think as most people grow their net worth, they like to have a bit of guidance. If they already have a free account with Personal Capital and built a rapport with the financial advisor, it would be easy to move to the paid investment management service.

What do you think? Does Personal Capital sounds appealing to you? I really like it and will stick with them as long as they don’t do some kind of hard sell on me.

***Update: I scheduled a financial planning session with Personal Capital and it turned out very well. They gave some great advice and I have a better handle on my investments.

Sign up with Personal Capital through this link.

Disclosure: If you sign up with Personal Capital, I may receive a referral fee depending on the size of your portfolio.

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{ 27 comments… read them below or add one }

JC @ PassiveIncomePursuit October 19, 2012 at 5:10 am

I actually just read about Personal Capital on another website. I hadn’t heard about it before but after seeing some of what they have to offer it would definitely make it easier to get a quick look at the overall asset allocation.

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retirebyforty October 19, 2012 at 11:24 am

I think they are quite new on the scene. I really like them so far. Once I fix all the problems, it should be much easier to checkup on my investment.

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Kim October 19, 2012 at 9:43 am

Thanks for the advice. I love Vanguard funds for the ease and low fees. .9 doesn’t seem to bad until you realize you can get one for .1. I will check out this tool at some point. Looks promising.

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retirebyforty October 19, 2012 at 11:26 am

My 401(k) didn’t have much selection so that’s why I went with FLPSX. PENNX was left over from a while ago. I think that was before I found out about VB.

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Justin October 19, 2012 at 11:31 am

Just gave Personal Capital a try. Unfortunately, it is only able to link to 1 of our 6 investment locations. :( It seems our accounts are known locations and easily found in the list, but PC won’t connect to them. Darn.

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retirebyforty October 19, 2012 at 3:55 pm

Sorry to hear that. I had a problem with my 401k initially too. PC won’t connect? Maybe check with their tech support.

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Lance @ Money Life and More October 19, 2012 at 7:20 pm

Is there any reason you haven’t consolidated all of your accounts with one brokerage firm? Seems like it’d make life a lot easier for you, especially now that you won’t be adding any new accounts unless you decide to unretire…

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retirebyforty October 20, 2012 at 8:05 am

I’m working on it. :)

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Jeremiah October 19, 2012 at 8:39 pm

If you can figure out more detail behind that Global Diversified fund, let us know. We have the same thing, and don’t really understand how it works.

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retirebyforty October 20, 2012 at 8:06 am

I tried before and could never figure out an equivalent fund. I’m going to roll over so I have more control over it.

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Leigh October 19, 2012 at 9:20 pm

Personal Capital seems kind of cool, but since all of my investments are with Vanguard, I think that a combination of their tools and my spreadsheets is sufficient for now. Plus, I only have a total of four funds (five if you count Admiral and Investor shares as separate funds…) in three accounts, so keeping track of my allocation is pretty easy.

It sounds like it is definitely time for you to roll over your 401(k)! What do you plan on doing with it? Or is that a post for later? :)

Happy weekend!

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retirebyforty October 20, 2012 at 8:07 am

I think that’s good enough too. I need to simplify my investments. Have a great weekend!

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Cherleen @ My Personal Finance Journey October 20, 2012 at 2:56 am

I have been using Mint since I started with our investments. Then, I came across a blog post discussing Personal Capital so I decided to try it out. So far, it is working fine for me and I find it cool I may decide to keep it for a couple more months.

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retirebyforty October 20, 2012 at 8:08 am

I like Personal Capital a lot more than Mint because of all the new features. Mint was cool, but they should have added these features before Personal Capital come along.

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Don October 20, 2012 at 8:11 am

Shoot, when we start out, the balance (401k) is low and that (almost) 1% doesn’t seem like much. But after a decade, and the returns of those high fee funds perform about the same as index funds (where the fees are .10%), it’s obvious that the high fee funds are rip offs.

Too bad I didn’t read your article 5 years ago! Time for me to switch up my funds too! Actually I need to get some bond funds also…

Thanks for waking me up!

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retirebyforty October 21, 2012 at 12:16 am

It’s hard to change investment. The inertia is very difficult to overcome. We are so busy with everyday life that we don’t realize how much we are paying. I’m moving all my investments to Vanguard. :)

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Don October 23, 2012 at 10:09 am

smart move (or Schwab if you are looking at index funds). I think the two: Vanguard and Schwab are having a bit of a fee reduction battle… It’s a win-win for us investors :)

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Connor Harley October 20, 2012 at 11:59 am

Personal Capital. That looks helpful and efficient. Is it easy to use?

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Brick by Brick Investing October 21, 2012 at 6:44 am

You are the second person to say this website is a great tool. I am signing up for it as we speak!

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retirebyforty October 22, 2012 at 6:52 am

I like the site. It’s much better than Mint. :)

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Savvy Scot October 22, 2012 at 3:03 am

I just made my first investment last week in a mutual fund! I cannot believe how vast your annual fee is!! Looks like you have a nicely diversified portfolio though!

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retirebyforty October 22, 2012 at 6:53 am

Yeap. 0.8% doesn’t sound like much when you are starting out, but it adds up.

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Roger @ The Chicago Financial Planner October 22, 2012 at 7:57 am

Good post and I will check out Personal Capital, I’ve read some good things about the service. Kudos on the approach you are taking to managing your investments and the diligence you are obviously applying to this.

At the risk of sounding self-serving (as a practicing fee-only financial advisor) I would say to anyone, including prospects, the costs of a financial advisor need to be evaluated in the context of one’s situation, stage of life, and comfort and expertise in managing their own situation. Additionally a qualified financial advisor can add a 3rd party perspective based upon his/her experience. Clearly their value proposition has to be right for a given client’s situation.

My clearly biased view is that fee-only advisors should be the only ones considered. I’m not saying that there are not qualified advisors who make some of their compensation via the sale of financial products, but how can you be sure they are doing what is in your best interests vs. what benefits them financially?

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retirebyforty October 22, 2012 at 10:42 pm

I think Personal Capital is also a fee only financial adviser. I’ll need to check on that.

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Craig February 17, 2013 at 9:36 am

I moved all of our accounts, with the exception of a checking account, to Fidelity 2 years ago, and have been very happy. With everything in one place, I can see, and take action, on anything in any of the 8 accounts (2 IRAs, 2 Roth IRAs, 2 529s, 2 taxable brokerage) from one login. Fidelity provides good tools for the asset allocation and other info you would want as well. You can look at one account, all accounts, or any combination between. Seems a lot easier to find one provider who gives you what you want, and use them exclusively. If you’re still working, yes you may have a 401k that is not something you can move, but almost everything else is movable. Definitely not an ad for Fidelity, as I’m sure other big houses can do everything they do too.

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Teresa Kielty October 29, 2013 at 10:06 am

Hi!

Great site! I have been lurking quite a while now and was intrigued by Personal Capital.

I only invest with Vanguard (5 cash funds) (3 retirement funds) and with Ameritrade (one cash stock account) (one retirement stock account). Emergency fund and checking with one bank and NEVER TAKE FROM (only add to) savings account at another bank, I also have some cash stash that for some generational DNA tells me to keep some cash in the house at all times. Who knows, when we have a complete electricity knock down and no one can take a credit card for payment I will be able to still buy food and water.

So I do not think anything more than manual checking of my accounts is warranted. But thanks anyway!

I realize that sounds a bit strange at first until one began hearing from people in NYC after 9-11 that if you did not have cash you did not eat. Credit Card machines did not work and if you had a generator you could gouge anyone that needed to power up their cell phones.

I am 58, unemployed but since being unemployed I have had the time to watch and learn from sites like this and make more money off my investments than if I were working. I will be going back to a regular job but I do not think I will do the corporate thing – I think I will just temp for the cash to keep me from having to take from my investments.

Right now I have $395000 in cash/investments. No house. I rent.

Next stop: Prosper. My state does not allow me to directly invest with Prosper but I understand I can do so if I am willing to not get into the bio’s then I can invest sight unseen. I am intrigued but also cautious so I think I will begin with just $1000.

I really appreciate this site. And no, I did not come from money, When I was married I handled the finances including investments and when we divorced we split the pile 50/50. That was about two months ago and I have already moved
my cut up by %10. But Jeesh!, I just do not think this market it going to continue on this zoom so I am watching very very carefully my investment accounts. I used to be a buy and hold investor but not now at these prices. Way too rich. I’ve got $100,000 in an investment account that I would love to purchase some stock but the market is so rich I will just keep waiting.

Thanks again!

Teresa

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retirebyforty October 30, 2013 at 7:56 am

Congratulation and thank you for reading RB40! You are doing very well with your investment. It’s great that you took control of your finance. So many people has financial problems after a divorce.
You should still try Personal Capital. They can give you a financial planning overview to check if you can do better with your investment. They are adding new features all the time like a reminder to plan for your tax near the end of the year. Good luck!

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