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.
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.
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
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.
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.
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.
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.
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).
- Our domestic stock portfolio has almost no exposure to Mid Cap Growth and Mid Cap Value.
- Our portfolio contains little or no exposure to inflation protected securities (bonds.)
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.
For 2018, Joe plans to diversify his passive income by investing in US heartland real estate through RealtyShares. He has 3 rental units in Portland and he believes the local market is getting overpriced.
Joe highly recommends Personal Capital for DIY investors. He logs on to Personal Capital almost daily to check his cash flow and net worth. They have many useful tools that will help every investor analyze their portfolio and plan for retirement.
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