A couple of months ago, I joined Personal Capital and started tracking my net worth there. In the past, I had a Mint account, but I always got tied up in categorizing payments to make the budgeting look right. That was a lot of time spent and I’ve found that I’m better off just being generally frugal with a few splurges here and there.
Where Mint struck me as a budgeting tool first and an investment tracker second, Personal Capital is the other way around. It seems to be 90% investment and net worth focused with only a small budgeting component.
Before I get too far into Personal Capital, I need to take a step back. Since I started this blog in 2006, I’ve been tracking my net worth with a spreadsheet. That means I can go back to watch 30% of my net worth disappear in the housing crash in 2007. My net worth was very small back then and it was paper money. And sadly, the price of my condo hasn’t caught up to what it was before the crash.
It’s geeky fun to stroll down financial memory lane.
I still update my net worth with a spreadsheet today. I used to do it on a monthly basis, but now it is typically quarterly. That’s simply a factor of not wanting to bug the wife to get her password for her Thrift Savings Plan, which seems to be quite the chore. (Don’t tell anyone, but sometimes I cheat and do a net worth update and just assume the value of her investments went up or down similarly with mine. I mark these as “estimated net worths.”)
What I like about spreadsheet is that I fill it in quickly. It probably takes me a half hour. I do this by bookmarking the 20+ websites where I have money and using LastPass to login quickly to pull the numbers. I even have links to Edmunds to estimate our car’s value.
The spreadsheet is also particularly good at combining my money with my wife’s money. It simply has infinite flexibility. I can create new categories such as the kid’s money, our liquid cash, our retirement account totals, and our real estate holdings.
So why would I join Personal Capital when I already have a working system? Personal Capital updates my net worth in real time. If my Google, err… Alphabet, stock goes up, it’s reflected immediately. I don’t need to log into 20+ websites and transfer numbers. It’s the ultimate “Lazy Man” tool.
Personal Capital also gives me different information. I have four retirement accounts with different holdings in each. Personal Capital can look at all them and show me how much of my money is invested in emerging markets. This view into my asset allocation is not something I can easily track with my net worth spreadsheet.
Sometimes, I think I’m crazy to use two net worth tools. I wonder if 90% of people even use a single tool or ever do a net worth calculation. However, I think they both have their benefits and I’ll take a bit of each.
Other than starting this personal finance blog, tracking my net worth has probably been the biggest reason for our financial success. I wish I could convince more people to do both.
I’m a big fan of the spreadsheet approach. I do use Personal Capital as well, but honestly in my experience any of the services that automatically fetch account balances are flaky. Half the time at least one of my accounts needs to be re-authorized, or have a security question answered, or some such.
But more importantly the online NW tracking tools come and go. And when they go, your data goes with them. So trying to retain any kind of historical record is impossible.
Meanwhile I’ve been updating my spreadsheet monthly for 15 years now. It’s lasted through switching between spreadsheet programs (Appleworks, excel, openoffice, libreoffice, etc..), and through opening and closing dozens of accounts (I can just hide columns for accounts that are no longer active).
And as you mention it’s infinitely customizable. I can slice and dice the accounts however I want. And I rather like that I’m forced to login to each account. It helps me ensure that I have the various login credentials for each memorized (well, mostly ….).
It also keeps me somewhat engaged in what’s going on with them. More than once I’ve found something amiss (for example HSA contributions that weren’t being transferred to an investment account) that I would never have noticed if I let Personal Capital do the checking.
Lazy Man says
There are a lot of NW tools that come and go. There was a time when I reviewed a few dozen at Finovate conferences. Mint, owned by Intuit, has stood the test of time. Personal Capital’s NW tool is about getting them clients to manage finances and that model has worked well for years.
One of the best things I did in the last year was get a password manager. I don’t know if LastPass is the best, but it better than memorizing passwords for dozens of accounts or sharing them across accounts.
I don’t think Personal Capital replaces checking for things that are amiss. I think you can get 90% of net worth tracking, asset allocation, and budgeting information for 10% of the work. I don’t get any asset allocation or budgeting from my spreadsheet.
I guess I’m saying there’s some overlap in that they are both NW tools, but there’s advantages and value to each approach.
You’re definitely right that there are advantages to the automated method. Unfortunately for me Personal Capital can’t do asset allocation for most of the funds in my company’s 401k, profit sharing, or deferred compensation programs so a large portion of our NW requires me to manually specify the allocations, and that takes a lot of the ‘automated’ out of it.
I also agree that there are some NW trackers that have stood the test of time. But none have stood the test of time as well as my spreadsheet :)
And +1 on lastpass. I use it as well, but I still prefer to memorize my passwords. Half as a game, and half because I have this vision of being on my death-bed, wife at my side, with my lastpass second-factor yubico key hopelessly crushed during a car crash, using the last bits of my energy to scrawl out the usernames and passwords for all of our accounts so that she doesn’t die destitute while millions of dollars sit locked up behind a password.
I kid of course, but only a little.
I tried Personal Capital, but the restrictions some banks (and brokerages and etc) made me start second-guessing how safe it is. I don’t think a single bank has come out and said, one way or the other, whether they would refuse to cover fraud losses if a third-party aggregator like PC or Mint got hacked. Only a few banks offer a read-only view that you can use for these aggregators.
Even though I deleted my bank accounts from PC, I still get calls about once a quarter offering their asset management services.
Lazy Man says
The information is usually stored and secured by Yodlee which is the trusted company that most of these companies use. I think Yodlee is almost exclusively read-only.
Also, there’s some information here about the bank being responsible for fraud. They’d have to show customer negligence… and none of a bank, Yodlee, or Personal Capital hack would qualify as customer negligence.