Get your net worth growing and retire confidently!
Quick, what’s your net worth today? Can you answer this question within a couple of minutes? It is vital to measure where you are in your journey towards financial independence (FI). With just a few keystrokes, there are modern tools available to track what you own, what you owe, what you earn and what you spend. There are websites, software programs, Google Sheets, and Excel spreadsheets you can create and use. I have used them all, and have also done custom coding on Excel Macros and developed web data queries for both personal financial and business analytics purposes. After all of this, I finally found one that is superior by far.
When I started this website, I committed to myself I will only write about absolutely relevant products that help you in your 10! journey. In addition, I want to be a long-time customer and user of those products before I recommend. After much consideration, I recommend you to sign up for Personal Capital. In this review, I will cover what’s great about this tool and also its limitations, which I am sure they are working on.
If you are focused on earning income or controlling your expenses, you shouldn’t spend much time creating your own trackers and updating them periodically to keep them current. Focus your attention on increasing net worth and analyzing your progress, not tracking it. Personal Capital is a simple-to-use, elegant and analytically rigorous FREE tool that allows you to track your financial progress daily.
Personal Capital pulls in current balances from all your financial accounts, including brokerage accounts, mutual funds, bank accounts and credit cards. This part is easy to do. What’s useful to you is that Personal Capital organizes this information into informative and actionable insights. Starting from your net worth, Personal Capital focuses on the main metrics that all 10! readers must be focused on improving. In addition, it does a lot more. Let’s say, you want to know:
- What is my average income this month and how does it compare to last month, this year and prior year you made? This income can be from your salary or dividends or any payments made to you.
- What is my average monthly expense this quarter versus prior quarter and prior year?
- How is my net worth growing this month over last month or last year?
- What’s my current balance due on all credit cards?
- How are my investments doing against the benchmark indices like S&P 500?
- Am I paying too much in fees in my 401(k) plan or in any mutual funds? 10! Goal Achieved: Investment Fees in my portfolio is now significantly less than
0.2%0.1% (working towards getting to 0.05%!). In case you are wondering, this is a big deal if your portfolio size is large. For a $1 million portfolio, 0.2% fees means $2,000 per year versus just $500 per year (for 0.05% fees), annual savings of $1500! More than a year’s worth of lattes!
- Am I on track to retire early? This is a question that Personal Capital answers particularly elegantly (see screenshot above) based on simple inputs from you. They have crunched rigorous analysis and Monte Carlo simulations combined with actual historical data to give you both an “average” (projected) and “worse case” (10th percentile) results in simple graphical form that you can easily play with to try different assumptions.
With its easy to navigate menus and planning tools, you can answer all the above questions quickly. You will realize some of these questions would normally require a paid financial planner or your valuable personal time in compiling the information from various statements. The use of this service will certainly save you money and time but more importantly, helps put your focus where it belongs – increasing your net worth!
Their portfolio analysis and retirement planning tool has powerful analytics and user-friendly charts to keep you on track.
They also have an advisory service for investment assets you want them to manage, with competitive fees in the business. This would be particularly useful for employed professionals who don’t have the time to manage their own investments and want a reliable fee-based professional service (instead of commissioned brokers who push expensive products).
Overall, Personal Capital is an excellent online tool but it can be improved. The suggestions I have for them are:
- Dividend income predictor tool based on the equities and funds in the portfolio. It would be good for passive income investors to have visibility of their likely monthly income over the coming 12 months, and how that has changed over the same period in the prior year.
- Tracking of different income categories beyond salary or investment income.
- Expense pie-charting. Categorization of expenses to show how the expense profile changes with time.
These are minor limitations compared to its suite of valuable benefits. This is by far the most versatile, useful and powerful personal financial tool in the market (did I mention free?). Try it and let me know your feedback. Note: Personal Capital is meant for those with US financial assets. I hope they expand this tool to cover other countries, at least for the sake of visitors to this site from Canada, UK and Australia and several other countries!
Raman Venkatesh is the founder of Ten Factorial Rocks. Raman is a ‘Gen X’ corporate executive in his mid 40’s. In addition to having a Ph.D. in engineering, he has worked in almost all continents of the world. Ten Factorial Rocks (TFR) was created to chronicle his journey towards retirement while sharing his views on the absurdities and pitfalls along the way. The name was taken from the mathematical function 10! (ten factorial) which is equal to 10 x 9 x 8 x 7 x 6 x 5 x 4 x 3 x 2 x 1 = 3,628,800.