25 January 2013

Personal Capital Finance Tracking Solution

house outta hunnids
I'm using Personal Capital to help keep
my financial house in order.
Well, it's a good thing I didn't make regular posting one of my goals for the year! The holiday season saw some sort of regularity here, with some weeks even seeing two posts. However, I suddenly just didn't feel inspired to write. So I didn't. But never fear, now I'm here.  Hopefully, I can develop more posts than this one, but if not, c'est la vie. Anyway, on to today's main attraction: reviewing the budget tracker part of Personal Capital.

In today's society, the journey toward FIRE is much easier than when Joe Dominguez and Paul Terhorst first paved the way. We now have the benefit of a host of tools and technologies that were only figments of the CIA's imagination. While using spreadsheets to track expenses certainly isn't a new idea, technology has advanced the practice to a level that would elicit blank stares from anyone who has been away for a quarter century. Today's online budget trackers allow anyone to do for free what might have very well required hours of research and labor to accomplishin a matter of mere minutes.

Personal Capital thinks I'm too
bullish on US stocks.
Probably the biggest and most well-known of the online trackers is Mint. But being the contrarian that I am, I have never been interested in jumping on the Mint bandwagon because everyone else uses it. So when I heard that there was a less-popular, possibly better ride around, I decided I'd check it out. Founded by Bill Harris, a former CEO of Intuit (which owns Mint), Personal Capital does all the cool stuff that anyone has come to expect of an online budget tracker in the 21st Century: keep track of all your transactions on all linked accounts, present that information on pretty visuals, stay up-to-date on account balances, and many other related tasks. It also offers a bill pay feature, though I haven't actually used it.

The expense tracking capability that Personal Capital now provides me is the most valuable bit. In the past, I'd tried several budgets in Excel and then just generally writing down all my transactions, all to no avail. Now with Personal Capital, the vast majority of my transactions get tracked and aggregated within a day or two. I can have a basic snapshot of my finances at any moment along with pretty graphs. I know how to do something similar in Excel, but it would take quite a bit of programing and time to get to the same level. And it wouldn't be on my phone. This is already done for me. As they say, work smarter, not harder. That's the motto I live by.

screenshot of asset allocation from Samsung SGH-727
Asset allocation graphic on the
Android mobile app.
According to Harris, Personal Capital is really gunning to be the financial adviser market for those who have between $250k and ~$3mn in investable assets. That's not me, so it come as no small surprise that I don't use their adviser service. In fact, getting the advice isn't even possible until you have $100k worth of invested assets linked. (Currently, my only investment is my retirement account. Company match is free money which I might as well take.)

Although I don't have enough assets to qualify for advice, it does still show tips and an overview on my home screen (example on the right). Based on the recommendations they've given so far on my home screen, I don't really like their asset allocation. But it could be different if I actually got their advice because I assume they'd tailor it around goals. Right now, they just compare me to their baseline portfolio. When I finally get enough assets under management for them to even want to advise me, I'll give an update as to what their advice entails.

Everything lovely about the web-based version of Personal Capital extends over to the mobilesphere as well. They have an apps for both Apple and Android-powered products that puts the full functionality of the website at your fingertips. (Not yet sure about Windows Phone, their site is a bit mum on that subject too.) Just like the web-based version, their apps show a snapshot of income, expenses, and holdings at any specific moment in time. I actually prefer the graphics on the app better because they seem slightly more concise and are easier to find vs. the ones on their website. They also will give advice via mobile, but see my previous comments on advice.

Of course, all the wonderful things about Personal Capital are only possible if you link your financial accounts. That requires you to enter the login information for any account that you want to link. In this digital age, many are understandably leery about giving login information to their life away. Although we know that even the government can't protect itself, we'd like to know that these companies at least make an attempt to keep our information secure. I'm please to report that so far, I've seen no reason to believe either the site or app are insecure. The website uses https and standard banking industry security features. I've seen better only once or twice. The app requires a 6-digit PIN for login after initial linking with your account. They do NOT ask for personal information like SSN, address, etc., although that might become necessary for the advising side.

In summary, Personal Capital is a solid platform that I'm glad I finally started using. Using it will reinforce the positive change I've finally recently been able to put to my wallet. If you don't already track your finances, then I'd recommend you sign up. It can help you identify where exactly your money is (not) going without you having to feel guilty for forgetting to write down something. If you're already using an alternative (i.e. Mint, manilla, etc.), I wouldn't rush over unless you just feel the urge to have your finances tracked all over the place or you have over $100k in assets invested and want advice. Again, I haven't actually looked into the advice side, but they are licensed by the FTC. If you decide to check it out, leave a comment letting the rest of us know how you (dis)like it!

House image sourced from 401(k) 2013.

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