Advertiser Disclosure

Investing

Personal Capital Review 2019

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Personal Capital may be many things, depending on how you use it. Founded in 2008 by a former CEO of PayPal and Intuit — the creators of Quicken software — Personal Capital is a free financial planning and investment tracking app. Similar to Mint.com, the app focuses on investing rather than bill paying, allowing users to consolidate investment accounts, track spending, forecast retirement progress and gain insight into asset allocation and investment fees.

The other part of Personal Capital’s business is a hybrid of algorithm-driven, robo-advisor services and traditional financial planning for which investors are charged an annual portfolio percentage. The company offers tiered services depending on the total assets invested. For users with $100,000 to $200,000 in assets, Personal Capital offers investment services through the help of an advisory team. Managed investment portfolios include exchange traded funds (ETFs), which are managed for tax efficiency with equal weighting in each sector. They also offer advice on 401(k) investments, budgeting and spending, along with regular access to an advisor.

Personal Capital also offers wealth management services for those with $200,000 to $1 million in investments. This includes investment management of a portfolio of ETFs and Stocks, along with the help of two advisors, a full financial plan that considers college savings and other financial decisions, as well as tax loss harvesting. For customers with more than $1 million in assets, Personal Capital’s private client services include all wealth management services, plus estate planning, private banking and access to things like deferred compensation strategy and donor-advised funds.

Personal Capital
Visit Personal CapitalSecuredon Personal Capital’s secure site
The Bottom Line: Personal Capital offers a whole new way to manage your money with the help of a free advisor consultation, free planning and free investing tools make it appealing to investors of all types.

  • Free investing tools provide insights for the average investor.
  • Retirement, college and estate planning services are available to investors with a higher net worth.
  • Investment management favors equal-weighted indexing, following a modern portfolio theory.

Who should consider Personal Capital

Anyone can use the free account aggregation and monitoring tools, which lets you play around with retirement assumptions and see what today’s savings might yield for a future return. You can also view your investment portfolio holdings by sector, asset class, expense ratio and more, which can provide a perspective on your portfolio.

The other services Personal Capital offers may be a solid option for hands-off investors who have amassed some savings and would like professional help. If you have at least $100,000 in investable assets, when you sign up for the free tools you will be prompted to set an appointment for a phone consultation with a live advisor. This person evaluates your portfolio holdings and shares recommendations for professional management. The specifics of that management will depend on the level of assets you decide to invest. Even if you don’t decide to invest with Personal Capital, going through the process of gathering assets and discussing your financial picture with someone can be an eye-opener.

If you are a socially conscious investor, Personal Capital can help you create an investment strategy to restrict certain businesses or industries according to your preferences.

Personal Capital fees and features

Amount minimum to open account
  • $100,000
Management fees
  • 0.89% for accounts of $100k - $1M
  • 0.79% for accounts of $1M - $3M
  • 0.69% for accounts between $3M and $5M; lower fees for accounts over $5M
Account fees (annual, transfer, inactivity)
  • $0 annual fee
  • $0 full account transfer fee
  • $0 partial account transfer fee
  • $0 inactivity fee
Account types
  • Individual taxable
  • Traditional IRA
  • Roth IRA
  • Joint taxable
  • Rollover IRA
  • Rollover Roth IRA
  • SEP IRA
  • Trust
Portfolio
  • Personal Capital offers 6 high-level asset classes.
Automatic rebalancing
Tax loss harvesting
Tax loss harvesting detailPersonal Capital's tax optimization process focuses on three key areas: tax allocation, tax loss harvesting and tax efficiency.
Offers fractional shares
Ease of use
Mobile appiOS, Android
Customer supportPhone, 24/7 live support, Email, 5 branch locations

Strengths of Personal Capital

  • Award-winning dashboard offers a complete financial picture. The free tools are fairly robust, offering a high-level view in terms of your net worth. Linking all your accounts will provide the most accurate overview of your financial state.
  • Money management that grows with your wealth. As your assets grow, you get increased access to Personal Capital’s sophisticated wealth management services, which means more help in making important financial decisions.
  • Options for education and estate planning. At every wealth management service level, there is a focus on big-picture financial planning. Personal Capital advisors will professionally review your 401(k) and other retirement assets, and offer advice on college savings plans and estate planning strategies.

Drawbacks of Personal Capital

  • High management fees. Personal Capital charges an asset management fee of 0.89% for portfolios between $100,000 and $1 million, which is higher than fees charged by low-cost robo-advisors.
  • High minimum balance. To gain access to financial advice through Personal Capital, you’ll need at least $100,000 in invested assets. Comparatively, Schwab’s Intelligent Advisory offers similar robo-advisor services for account balances of at least $25,000.
  • Upselling. Once you sign up for the free tools, you may be contacted about paid services. If you meet the minimum asset requirements for other service tiers, Personal Capital will try to win more business.

Is Personal Capital safe?

More than a decade after Mint’s launch, most fintech users are comfortable linking financial accounts to another platform. Personal Capital’s safeguards are safely in line with contemporary standards. The company imports data from your financial accounts through Yodlee, which connects with financial institutions using modern security protocols. Personal Capital’s website does not store your account credentials and no transactions are made through the company’s platform. Data shared with Personal Capital is protected through a highly rated encryption standard, a multi-layer process involving “keys” only users would know.

For your protection, all investment securities are held by an SIPC member broker custodian, protecting your securities up to $500,000. You can check their brokers credentials by searching for Personal Capital Advisors Corporation at brokercheck.org.

Additionally, the startup has solid leadership and financial technology experience behind it. Company executives have done stints at Intuit, Yodlee and E-LOAN, and there are a handful of certified financial planners on the wealth management side. The board of advisors includes Nobel Prize-winning economist Harry Markowitz, behavioral finance expert Shlomo Benartzi and former Securities and Exchange Commission commissioner Luis Aguilar.

Final thoughts on Personal Capital

With many free features designed to attract users, Personal Capital is worth consideration. Its asset allocation models are fairly rigid, but they seem to outperform comparative benchmarks over time. Investors should carefully consider the asset management strategy before signing up for investment advisory or wealth management services. In the meantime, the financial planning tools and initial consultation will give the average investor insights into their current state and where they would like to go.

Open a Personal Capital accountSecured
on Personal Capital’s secure website

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Melissa Phipps
Melissa Phipps |

Melissa Phipps is a writer at MagnifyMoney. You can email Melissa here

Advertiser Disclosure

Investing

Fidelity Review 2019

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

With a whopping $6.9 trillion in assets under management, Fidelity is one of the country’s largest broker-dealers. That kind of size and power may seem like a detriment to some, but Fidelity’s focus on investor value, long-term planning, and fair and transparent pricing makes the Boston-based giant one of the industry’s more likable brands.

Fidelity offers an extensive array of investment products, including hundreds of proprietary Mutual funds , index funds and exchange-traded funds (ETFs), and access to thousands of competitor fund investments. Its brokerage platform lets you trade international stocks, stock options and shares of initial public offerings. The firm also offers margin accounts and short selling capabilities for sophisticated investors. There is investing guidance available when you need it as well as 24-hour support. The best part? Lately, Fidelity has been on a mission to reduce the fees and expenses associated with being an investor.

Fidelity
Visit FidelitySecuredon Fidelity’s secure site
The bottom line: It’s not an overstatement to say Fidelity has something for every investor, with trading costs and account minimums that can’t be beat.

  • Full-service broker with a strong brand reputation
  • Extensive options for all investor types
  • Low or no fees and commissions on most products

Who should consider Fidelity

With much to offer, Fidelity is a great fit for many investor types. Beginner investors will appreciate the amount of guidance Fidelity offers to help you set a goal, create an investment strategy, and understand the benefits and risks of different asset classes. Once you’re ready to invest, Fidelity offers Mutual funds with no minimum investment and no fees as well as no-fee brokerage accounts.

For index fund investors, Fidelity has four funds with 0% expense ratios and a roster of offerings that beat even low-fee giant Vanguard on price. Trading Stocks or ETFs on the regular? Fidelity has low-cost trades, access to tons of research and a great platform for active traders. One company study found that even Fidelity’s bond prices are more competitive, saving investors an average of $14.55 per bond.

Fidelity fees and features

Current promotions

Get up to 500 free trades for two years when you fund an eligible account. The number of free trades is determined by the size of your deposit.

Stock trading fees
  • $4.95 per trade
Amount minimum to open account
  • $0
Tradable securities
  • Stocks
  • ETFs
  • Mutual funds
  • Bonds
  • Options
  • Futures / commodities
  • Forex
  • Crypto-currency
Account fees (annual, transfer, inactivity)
  • $0 annual fee
  • $0 full account transfer fee
  • $0 partial account transfer fee
  • $0 inactivity fee
Commission-free ETFs offered
Mutual funds (no transaction fee) offered
Offers automated portfolio/robo-advisor
Account types
  • Individual taxable
  • Traditional IRA
  • Roth IRA
  • 529 Plan
  • Joint taxable
  • Rollover IRA
  • Rollover Roth IRA
  • Custodial Uniform Gifts to Minors Act (UGMA)/Uniform Transfers to Minors Act (UTMA)
  • Custodial IRA
  • SEP IRA
  • Solo 401(k) (for small businesses)
  • SIMPLE IRA (Savings Incentive Match Plan for Employees)
  • Trust
  • Guardianship or Conservatorship
Ease of use
Mobile appiOS, Android, Fire OS
Customer supportPhone, 24/7 live support, Chat, Email, 190 branch locations
Research resources
  • SEC filings
  • Mutual fund reports
  • Earnings press releases

Strengths of Fidelity

  • Low-cost trading. Considering its size and infrastructure, you might not expect Fidelity to offer a competitive commission rate of $4.95 per trade as well as no-commission trades on select ETFs. E-Trade and TD Ameritrade will cost you $6.95 per trade. Charles Schwab also offers $4.95 trades, but Fidelity edges ahead with lower margin rates for traders with large debt balances.
  • No-fee investing. The company made a bold move in 2018 by offering a handful of index funds with 0% expense ratios, no fees and no minimums.
  • Mutual funds . Fidelity offers more than 200 proprietary Mutual funds , representing a diversity of asset classes and investment strategies. More than 100 of the firm’s funds currently have four- or five-star ratings (out of five) by Morningstar based on risk-adjusted returns. You also can access more than 10,000 competitor Mutual funds , along with tools to help you screen funds according to features, ratings, returns, expenses and more.
  • Research and planning. When it comes to research, Fidelity hits the mark in multiple ways. As an asset manager, Fidelity’s global research is extensive. More than 400 analysts around the globe cover over 2,600 companies and generate tons of research. For the average investor, Fidelity offers information to help make stock trading decisions, build a fund portfolio and learn about IPOs. There are lots of tools and calculators for everyday financial planning as well.

Drawbacks of Fidelity

  • High minimums for new investor promotions. Fidelity offers between 300 and 500 free trades for two years when you open a new account with a minimum of $50,000 to $100,000. To be fair, these minimums are lower than those required for similar promotions from competitors such as Charles Schwab, E-Trade and TD Ameritrade, but it’s a hurdle for the average new investor.
  • Slow customer service. Overall, Fidelity gets fairly high marks for customer service, with its focus on investment guidance and education. But with a company this size, there are bound to be a few negative reviews. Fidelity’s tend to focus on the customer service and speed. Service representatives can be slow to respond to complaints, money transfers can take weeks, and many customer communications are sent through the mail, according to some customers’ comments.

Is Fidelity safe?

Fidelity uses sophisticated technology to safeguard client accounts and transactions. Accounts at Fidelity are encrypted with two-factor identification, requiring an extra step of replying to a text message when it comes to sensitive transactions. Voice recognition technology is used to authenticate your identity over the phone. Fidelity’s systems are under 24/7 surveillance, from security at local branches to monitoring transactions for identity theft and protecting Fidelity’s website with the industry’s strongest firewalls.

Fidelity accounts also are FDIC-insured for up to $250,000 and SIPC-insured for up to $500,000 per account.

Final thoughts

To be a successful investor, it helps to have the right tools. It also helps to understand exactly what you’re paying for so you don’t lose too much of your investment earnings to commissions and fees. Fidelity provides both to investors, which is meaningful for a company that’s been around for more than 70 years.

Open a Fidelity accountSecured
on Fidelity’s secure website

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Melissa Phipps
Melissa Phipps |

Melissa Phipps is a writer at MagnifyMoney. You can email Melissa here

Advertiser Disclosure

Investing

Decide How and Where to Invest Your Money With These 5 Questions

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

A few investment decisions are no-brainers, but others feel like you need an advanced degree before you can make the right move. And it’s no wonder; with a dizzying amount of brokers, assets and investment vehicles to choose from, it’s hard to know where to begin. If you’re ready to start investing, these five questions can help you decide where and how to invest your money.

5 questions to help you decide how to invest money

1. What are my investing goals?

Investing with a goal in mind may help keep you focused and can potentially grow your savings more quickly. It can also help you plan where to invest, which may depend on how soon you plan to use the money you invest.

For example, if you want to keep cash on hand for emergencies or another non-specific goal, you may want to stash it in a relatively risk-free, short-term option such as an online savings account or money market account. The interest rate you earn may be small, but it’s money you can count on.

If you have a few years and are saving for something significant, such as a new car or home down payment, you may attempt to increase returns slightly by investing in Certificates of Deposit and short-term bonds. These investments are less liquid, meaning you don’t have immediate access to the cash, but both can offer incremental yield without significantly increasing risk.

When you have a long time horizon to reach your goals, such as college tuition for the kids and your retirement, you can go for growth. This is when you might consider more aggressive investments, such as stock ETFs, index funds and actively managed mutual funds.

As you build wealth and grow more comfortable as an investor, how you invest for long-term goals may become more specific. For example, annuities or investment real estate could help you create income in retirement.

2. What is my risk tolerance?

When it comes to your risk tolerance concerning your investments, it’s easy to tell yourself it’s a measure of the thrill you seek as an investor. Frame it instead as how much you can stand to lose.

Would a 10% or even 20% dip in value send you running from the market? If your time horizon is long, your investments should be able to tolerate the occasional loss because the average return over time tends to trend positive. But timing is both critical and impossible to control. Stocks in the U.S. were experiencing a record bull market in 2018 before ending the year with dramatic volatility and negative returns. The closer you are to needing your investment dollars, the more you will feel the impact.

Once you understand your tolerance for risk, you can select an investment that’s in line. Sophisticated investors balance risk and return through strategies such as diversification. Stocks are expected to have higher returns but also more volatility than other types of investments. The more stocks you own, the less risk you assume, since you’re not betting on any single company’s future growth. Stock mutual funds and ETFs allow you to invest in a selection of many stocks, which is an easy way to add diversity with a single investment.

Still, even a broad index like the Standard & Poor’s 500 can be volatile, which is why some people carve out a portion of their investment dollars for more conservative assets, such as bonds or cash investments. It’s all about balance: Find the right mix of assets to keep you from worrying about what the market might do next.

3. What is this investment going to cost me?

One of the factors on which you should judge an investment is how much it costs. In general, it’s important to minimize fees, because every dollar paid in fees is a dollar lost in your investment returns. You don’t want to select investments solely because they’re cheap, but if you’re doing a comparison between two investments, the cost may be the deciding factor. Here are a few costs to consider, and ideas for minimizing them.

Brokerage account fees

To buy and sell investments, you start with a brokerage account. There are full-service brokerages offering a lot of guidance and handholding for a price, or discount brokerages that let you do most of the work online for little to no cost. Some large brokerages, like Fidelity and Schwab, offer both types of services.

Brokers will compete on platform capabilities, research and information, product selection and access to customer service when you need it. Discount brokers have become so competitive on price, it is easy to find one these days with little to no annual account fees. You should also pay attention to any account minimums, inactivity fees and transfer or closing fees.

Trading commissions

Think of these as transaction fees you pay each time you buy or sell an investment. TD Ameritrade offers flat-rate trades for $6.95, and you can trade equities at Schwab and Fidelity for $4.95. Mutual fund transactions may be more costly, but most brokers have a list of no-transaction-fee (NTF) funds they sell without commissions.

Expense ratios

If you invest in mutual funds, you pay for it on an ongoing basis with a percentage of your investment dollars. This is known as the expense ratio, and it covers things like administration, accounting, paying the portfolio manager, marketing, distribution and so on. Index funds and index ETFs typically have lower average expense ratios than actively managed funds because there is no manager to pay.

4. How much time and effort can I give to investing?

Becoming a skilled stock trader takes practice, experience, focus and strategic emotional detachment. It’s not easy, and luckily it’s not required to be a successful investor. There are various ways you can engage in the market, according to your desired level of participation.

Set and forget

If you prefer to pay little or no attention to your investments, you can easily achieve an investment portfolio that’s diversified, balanced for risk and in-line with your goals. A target-date fund, for example, is one that is managed with an end-date in mind, shifting the asset allocation from aggressive to conservative over time so you don’t have to think about it. There are also balanced mutual funds and ETFs combining combine stocks and bonds in a single investment; you can find one with an allocation you like and stick with it. If you want to keep it simple, a stock index ETF, one that tracks a broad market like the Russell 3000, offers stock diversification at a low cost.

DIY + advice

Willing to put in a little effort? You can manage your portfolio or enlist the help of a robo-advisor, an algorithm-based service that can automatically rebalance your portfolio on an ongoing basis, for as little as 0.25% to 0.45% per year. There are many robo-advisors to choose from, including Betterment, which has no account minimums, Ellevest, which has a socially responsible focus and mission to help women, and others.

Even venerable low-cost fund company Vanguard offers robo-advisor services, along with the option to chat with a human advisor, to help plan for things like education, retirement and other goals.

Active trader

With the advanced trading platforms offered by online discount brokers, these days it’s easy for the average person to be a self-directed investor. But it pays to understand how stock trading works before jumping in.

5. Which investment account do I use?

Perhaps the most important decision is whether to invest in a taxable or tax-deferred account. A taxable account — basically a default investment account with few rules or restrictions — offers the flexibility to withdraw your money at any time and use it how you like. However, for those who can bear a few restrictions, there are tax-advantaged ways to save and invest for specific long-term goals, including:

529 college savings accounts

These accounts are designed to help families pay for college tuition, room and board and other costs. You can invest through a 529 plan in different ways, depending on the plan — many include target-date fund options, managed to invest more conservatively as freshman year approaches, but others offer self-directed investing. Earnings in a 529 plan grow tax-free, and will not be taxed upon withdrawal if the proceeds are used to pay for qualifying education expenses. If the funds are not used to pay for college, they will typically be taxed upon withdrawal and you’ll also incur a 10% penalty fee.

Traditional Individual Retirement Accounts (IRAs)

There are a few potential tax advantages for investors using an IRA. If you don’t have another retirement plan through an employer, you may be able to deduct a portion or all of your contributions from your annual income taxes, and earnings in an IRA grow tax-deferred until retirement. You will pay taxes when the funds are distributed, but in retirement, your tax bracket may be lower than it is today. On the downside, if you need the funds before age 59 and a half, you may trigger a 10% penalty on top of that tax bill.

Roth IRAs

A Roth IRA works differently — there are no upfront tax deductions on contributions, but investment earnings are generally not taxed again if withdrawn after age 59½. Additionally, a Roth allows you to access your contributions before retirement, without penalty, if you use the money to pay for certain qualified expenses. There are income limits for Roth IRA investors, so high earners may not be eligible to contribute.

Bottom line

If you have don’t yet have answers to all five investment questions above, they should at least get you thinking. Each question is a bedrock to help you build a strong foundation for your investing future. Once you understand what you want from an investment and have a clear sense of what’s available, a bit of smart shopping is all that’s required to get started.

Need some help getting started? Consider consulting a financial professional to point you in the right direction.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Melissa Phipps
Melissa Phipps |

Melissa Phipps is a writer at MagnifyMoney. You can email Melissa here