To Personal Capital or Not to Personal Capital: That Is the Question

To Personal Capital or Not to Personal Capital That Is the Question _ AnythingYouWantBlog.com

Dear Readers:

I need your help! I have always managed my investments on my own, but I’ve recently been researching Personal Capital and I have to admit that I am intrigued. My general investment strategy is to invest as simply and easily as possible. I typical purchase low-fee index funds and ETFs that align with a fairly aggressive asset allocation. I then stay the course, not changing my strategy based on market fluctuations but instead believing that over the long-term, this strategy will yield positive results. 

Thus far, my strategy has yielded pretty good results. I weathered the recent market fluctuations without too much pain. I’ve earned some money over the years. And I have managed not to drive myself crazy in the process – no watching the market for daily fluctuations, obsessing about this going up or that going down, etc.

I’m beginning to wonder, though, if this strategy might be a bit too simplistic. See, there are a few things that I really don’t give much thought to. Taxes are a big one. I know that there are certain investments that should be held in tax advantaged accounts, and I do that, but that is where my tax strategy stops. My re-balancing strategy is simplistic at best, and I have paid zero attention to sector diversification (something that Personal Capital has lead me to believe is quite important).

Of course one huge benefit to my current strategy is low fees. All in, I average about 0.3% in fees across my portfolio, and I expect that will go down over time as I move out of some early investments with higher fees. Personal Capital charges 0.89% in fees, which could add a lot in costs over the years.

So what do you think? Should I continue to manage my money myself, or work with an asset manager? If I work with an asset manager, is Personal Capital the way to go?

 


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8 thoughts on “To Personal Capital or Not to Personal Capital: That Is the Question

  1. That’s a toughy. I do all my own investments and have done a tiny bit of research into alternatives. I don’t know about Personal Capital, but Betterment re-allocates and does tax-loss harvesting which would more than make up for extra fees by reducing your taxes. If Personal Capital does that, it might be worth it, but those fees would add up. If there was no demonstrable way to make up those fees, I wouldn’t do it.

    And there’s nothing wrong with a simple approach! I keep most everything in pretty broad mutual funds. I track our assets between stocks, bonds, REITs and lending club, and then break down stocks and bonds into domestic and international. Once anything is off by more than 5% from my ideal, I re-allocate and try to keep things tax-advantaged. I’ll probably keep this up for the foreseeable future.

    • Thanks for your thoughts! Sounds like I am using a very similar approach to you. I’ll have to run some numbers to see if the increased fee would be worth it for me.

      • I did well with Betterment when I had it, but I took the money and put it into a ROTH at Northwestern Mutual Investment Services. It’s doing alright there. I had a personal interest at the time as I worked for NM and the fees were waived. Funny, Betterment is invested in by NMIS as well.

  2. It sounds like you have a total stock market approach today. In addition to the fees, Personal Capital has a different approach. Emily from Evolving PF wrote a review of them earlier this year: http://evolvingpf.com/2015/01/personal-capital-review-investment-services-pitch/

    Investing isn’t complicated, if you follow an index fund strategy. Every year, I spend about an hour making a spreadsheet and calculating how I will allocate my investments for the year and then setting it up. It’s really simple. I just rebalance with new contributions each year. My portfolio is small enough still that I don’t worry about it that much. You can find these annual posts under the “investing” tag on my blog. I follow the Bogleheads philosophy. You can check out their wiki on a variety of pages including “Principles of tax-efficient fund placement”, though honestly, if you’re using all index funds, it doesn’t matter that much where you put things, especially with today’s low bond rates. I’m also happy to try to answer questions or share spreadsheets with you! You can always email me 🙂 (Not that I’m an investment professional…)

    I firmly believe in a total world stock market approach and I am very conservative, so I keep about 30% in fixed income, with the remainder split to 35% in a Vanguard or Fidelity Spartan total US stock market index fund and 35% in a Vanguard or Fidelity total international stock market index fund. It’s really simple to manage. My boyfriend has the same investing philosophy (though he has less in fixed income) and he also manages his pretty well despite touching it for all of about 5 minutes a year.

    You could also use the Vanguard Personal Advisor Services, which have a $50,000 minimum and I believe charge 0.30% on top of the low index fund fees. In my opinion, that’s better than Betterment/Wealthfront/other robo-advisors because if you feel comfortable with things, you can always drop their services without much complication, whereas transferring from Betterment to Vanguard later would be more difficult.

    Good luck!!!

    • Wow – thanks so much for all of your thoughts! I’ll definitely look into the resources you suggest and check out your posts on investing.

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