Top Investment Products

Top Investment Products

I use a few investment products and always look to add them to my list. So if you read my blog on Real Estate Investing, you will see I rarely use investment products but rely on my own searches and relationships I have developed over the years.

Road maps for Wealth Management

What I don’t like is linking my personal information to people I do not know like Personal Capital. So call me old-fashioned but giving up my banking information to an advisory firm is not my style. Therefore I suggest there is a better way to manage your wealth.

Look at it this way. How did Warren Buffet manage his wealth with 7 separate funds and no internet? He put everything into notebooks.

I have several million in assets from Real estate, privately owned businesses, and publicly traded companies. Therefore I have 3 major asset classifications. On basically 4 platforms not one.

  1. Interactive Brokers
  2. Wells Fargo Bank
  3. My notebook on my desk

Here’s what Personal Capital does for Free. From their web site. https://www.personalcapital.com/

  • See all your money accounts in one place, in real-time.
  • Get your Retirement Readiness Score in minutes.
  • Use Fee Analyzer to find hidden fees.
  • Start using these professional-grade tools today, for free.

Let’s look at each item Personal Capital offers me.

  1. See all your money accounts in one place. Do I really need to see my two bank accounts in one place? How about I keep my banks on my screen and log in, which I do every day to see what’s been deposited and my cash balances. I can tell you what my balance was 5 years ago to the day and how much came into it. How do you ask? Can put it in my bank notebook.
  2. Get your retirement readiness score. This is great if I intended on retiring which I am not. Therefore unless you really plan on retiring instead of doing what you love every day and making money doing it, then this would probably be a good feature for you. In other words, retiring people take notice.
  3. Use free Analyzer to find hidden fees. I use feeless services so not sure how this applies to me. Can it work for me? Will have to try it out. If handing over my personal banking information is part of the deal then I will probably decline. I have a call into them now but have no answer in the last 2 days even though I have entered my information excluding my bank account, so that may be the reason why they are not calling.
  4. Start using these tools for free means if you have less than $100,000 in your account. Once you reach a certain level, then I think the fees kick in. They do this to make money, so free is just to get you in the door.

Personal Capital Review

A platform for the high-net-worth client who wants the personal touch

 Updated Nov 30, 2020

We publish unbiased product reviews; our opinions are our own and are not influenced by the payment we receive from our advertising partners. Learn more about how we review products and read our advertiser disclosure for how we make money.

FAST FACTS
  • Account Minimum: $100,000
  • Fees: 0.89% to 0.49% for accounts over $1 million

“First of all, we must note that Personal Capital does not want to be classified as a Robo-advisory and would prefer to be considered a digital asset management service that also includes personalized advice from financial planners. So that said, the company was one of the first to put tools in investor’s hands and automate elements of portfolio management. Therefore Personal Capital is our top choice for portfolio management due to the way the firm’s advanced technology effectively manages risk and taxes.” (edited for readability)

New and Notable:

  • Personal Capital is a wholly-owned subsidiary of Empower Retirement, a retirement services provider, as of August 2020.
  • The Recession Simulator, which allows Americans to illustrate the effect historical recessions would have had on their investments, was introduced in June 2020.
  • Personal Capital Cash is a cash management service for U.S. residents and citizens with no minimum balance requirements. Investing clients receive a higher rate of interest.

KEY TAKEAWAYS

  • Personal Capital is our best robo-advisor for portfolio management.
  • Personal Capital has made it clear that the firm does not want to be thought of as a Robo-advisor. It’s a digital asset management service that includes access to financial planners.
  • You can use the financial planning portion of Personal Capital at no charge.
  • Investing with Personal Capital takes $100,000 to get started.

There are two ways to interact with Personal Capital. The first is a free planning tool that collects data from all of your financial accounts and makes some recommendations to improve returns. It’s well worth checking out, no matter where you bank or invest. Second way to interact with Personal Capital is an asset management service with a minimum account size of $100,000 to start. Clearly, this is not a service for the newcomer to saving and investing.

Pros

  • Clients are matched with a financial planner who can be contacted without limit.
  • The tax optimization strategies keep the tax burden to a minimum.
  • High-net-worth clients can use Private Client services.
  • Terrific retirement planning.

Cons

  • Investing account customers require a very high minimum of $100,000.
  • The mobile app is missing some key features available only on the desktop webpage.
  • No easy way to opt-out of receiving phone calls during the sign-up process.
  • Fees are high for a Robo-advisory.
“Personal Capital gets personal quickly. So the very first screen you see when setting up an investment account asks you for your email address and phone number. Two screens later, you are asked for your date of birth. The setup process requires you to schedule a call with an advisor even if all you want to do is use the dashboard to run an investment checkup. You can cancel the scheduled call, but you can’t get past the screen unless you pick a date and time. A brief biography of your assigned advisor is displayed, although there isn’t a way to choose a different one.”

“Once you have set your appointment with a Personal Capital advisor, you are then prompted to import your financial accounts, including banking, investment, and credit cards, to generate a picture of your finances and to analyze your current asset allocation. The process of opening an investing account includes some paper applications that must be printed out and mailed in.”

“Personal Capital has 12 different portfolio allocations and nearly unlimited strategic variations on those allocations based on personalization for each individual client, taking each investor’s financial life and specific goals into consideration. However, you will not be able to see the portfolio recommendation until after you have talked with your assigned advisor.”

You can open a Personal Capital Cash account without becoming an Investing client. This service has no minimums and no fees and allows flexible deposits, transfers, and withdrawals.

Primary Goal

“The primary goal that Personal Capital helps clients plan for is the big one—your retirement. You’ll be asked a variety of questions about your current income and what you expect to spend after you’re retired. Retirement planning includes Personal Capital’s proprietary Smart Withdrawal tool, designed to maximize retirement income by breaking out taxable, tax-deferred, and tax-free income. In addition, Personal Capital can advise clients on investing selections in their 401(k) accounts.”

“Personal Capital has a unique feature for its clients: the Recession Simulator, which shows the effect historical recessions would have had on their investments. The feature is built into the Retirement Planner, which runs simulations with your starting portfolio and incorporates expected return and volatility, annual savings, income, spending goals, estimated retirement spending, social security, and tax rules for taxable, tax-deferred, and tax-free investment accounts. It’s extremely enlightening and is intended to encourage you to stay the course.”

“You can add non-retirement goals to the platform, although there is little assistance provided when deciding on the size of the goal. Personal Capital can also advise on charitable gifts, which is a rare offering for the digital asset management and Robo-advisory services we reviewed but fits well with their target market of high-net-worth clients.”

“So you can set up automatic deposits to fund your Personal Capital account, and you are encouraged to do so. There is no margin available through Personal Capital though clients can borrow against their accounts. The interest rate paid depends on the client’s account size and the amount borrowed and is set at the 30 day LIBOR rate, currently hovering around 0.2%, plus 1.25%-3.25%.”

“Personal Capital’s analyzer tools should also be considered an account service, and one you don’t need to pay for. The fee analyzer looks at your allocations and fees to suggest alternatives that can save you fees or improve your diversification—and sometimes both. Your Investment Checkup can be even more valuable as it pulls in all your accounts, analyzes them, and makes recommendations on your overall portfolio mix. If this review were based solely on the free service and the value it provides, Personal Capital would score above all the other Robo-advisories on this count.”

Cash Management

Therefore “Personal Capital Cash is a high-yield account with aggregated FDIC insurance covering balances up to $1.5 million. There is no minimum balance to open a Personal Capital Cash account, so this offering isn’t tied to the investment management side. Cash held in your investing account earns no interest; you have to manually transfer cash to get it in the right place for saving or investing. Currently, there are no debit cards or other banking services available beyond the high-yield account.”

Portfolio Construction 

Personal Capital creates portfolios out of stocks, bonds, funds, alternative investments, and cash. There are 12 different portfolio allocations and then nearly unlimited strategic variations on those allocations based on personalization for each individual client considering their holistic financial life and specific financial goals.

Portfolios contain:

  • Individual stocks
  • ETFs
  • Fixed income for certain private clients
  • Private equity for qualified investors

The advisor relationship also means you can customize your portfolio beyond the match made through your profile. Your portfolio can include socially responsible investments, either in individual stocks or socially responsible ETFs, and your advisor can make transactions for individual stocks or ETFs at your request.

Portfolio Management 

“It is an understatement to say that Personal Capital leans heavily on Modern Portfolio Theory (MPT) to manage your cash. Harry “the Father of Modern Portfolio Theory” Markowitz is listed as the company’s portfolio strategy expert. Portfolios are monitored daily and rebalanced when they move outside the asset allocation boundaries. Moreover, Personal Capital uses what it calls “Smart Weighting” to ensure true diversification by monitoring and reducing concentrated exposures to a given sector or investment style, something that isn’t possible when investing solely in ETFs with capitalization weighting. The overall goal for turnover in a Personal Capital portfolio is 15% or less, which is intended to minimize the tax consequences.”

“Personal Capital’s investment management philosophy goes a step beyond tax-loss harvesting, seeking instead to optimize your tax burden rather than depending solely on tax-loss harvesting. Portfolios are designed to be tax-efficient, and Personal Capital uses individual stocks and bonds along with the different tax status of accounts to better protect returns. Investments with higher yields are placed in tax-deferred accounts, such as IRAs, to keep today’s tax bill lower. Mutual funds can be inefficient from a tax perspective and are not used in any of Personal Capital’s managed portfolios. Instead, ETFs stand in for mutual funds in the portfolio mix.”

User Experience 

Mobile Experience:

The mobile app is very well designed and this is reflected in the glowing reviews of the app on both the Apple and Google platforms. There are some features that are not available on mobile apps, including the Investment Checkup and performance statistics. The dashboard showing your current financial situation is built into the mobile apps, and this is the one you will probably check the most.

Desktop Experience:

All of the features offered by Personal Capital are on the website. Adding financial accounts is considerably easier on the desktop rather than on a mobile app. The website does use some financial language and descriptions that might be beyond what an entry-level investor may find comfortable.

Customer Service 

Everything is handled through the advisor assigned to your account. There is no generic customer service line to call once your account is established because you can contact your advisor directly. Prior to establishing an account, if you need to call the company to ask questions, our researcher found that Personal Capital answered the phones quickly and that questions were answered by helpful, knowledgeable people.

Education & Security 

Personal Capital’s website contains articles and guides for goal planning. The articles tend to be comprehensive and can be complex, but they are also excellent in terms of the quality of the content. You may feel as though you’ve earned an MBA after reading a dozen of them. Personal Capital also has a nearly daily blog that is updated with market news and developments.

“The Recession Simulator, which allows clients to estimate the effect historical recessions would have had on their investment portfolios, is a unique feature built into Personal Capital’s Retirement Planner.  Therefore You can run simulations with your portfolio, visualizing the impact past market swings would have had on your retirement plans. The goal is to provide insights to help with future planning. Recession Simulator incorporates expected return and volatility, annual savings, income, retirement spending, and social security, and builds in tax rules for taxable, tax-deferred, and tax-free investment accounts.”

“Personal Capital takes security very seriously, even engaging in a bug bounty program to ensure there are no gaps in its protections. So the firm encrypts all the data with AES-256 multi-layer key management and has strict internal controls on client data. Of all the Robo-advisories reviewed, Personal Capital has one of the most comprehensive security and data protection regimes.”

Commissions & Fees 

“The fees for Personal Capital are dictated by the dollar value of the assets you hold with them. There are three levels of asset management. So the lowest tier, Investment Service, is for those with $100,000 to $200,000 in assets; portfolios consist of ETFs, and you are given access to priority support services. Middle tier, called Wealth Management, is for those with between $200,000 to $1,000,000. These clients get two dedicated financial advisors and a much more flexible portfolio design that includes individual stocks and tax-loss harvesting, along with other perks.

To qualify for the highest tier of service, Private Client, you’ll need to start with $1,000,000 or more in assets. So The Private Client portfolio can contain individual bonds and private equity investments. The Private Client tier directly competes with established wealth management firms, with fees that start at 0.79% and range down to 0.49% (for assets over $10 million) per year for assets under management. These are much lower than the fees high-net-worth clients would usually be faced with a traditional wealth management firm”

MONTHLY COSTS

  • $100,000 portfolio: $74.17
  • $500,000 portfolio: $370.83
  • $1,000,000 portfolio: $658.33

my note: I WOULDN’T PAY SOMEONE THIS MUCH IN FEES!

Is Personal Capital a Good Fit for You?

“Personal Capital has a robust methodology, security, and service that you would expect as a high-net-worth client. The unfortunate part is that you have to be quite wealthy to access that level of service. However, it is worth using the wealth management app and dashboard just to see where you stand. So you may even find that the Personal Capital Cash account is a great place to park an emergency fund or simple savings account. An initial discussion with a financial planner is also free, but unlimited access only comes if you have the large account minimums to invest. That, sadly, is the big knock on Personal Capital as an investment Robo-advisory (again, not their preferred term).” (In other words,) the platform is excellent, but most people can’t meet the threshold to use it.”

“High-net-worth individuals, or those rolling a large sum out of an employer 401(k), might want to take advantage of the managed accounts at Personal Capital. So The fees are high compared to other Robo-advisors, but they’re lower than most financial advisors, who charge 1% to 2% per year for their services. More importantly, Personal Capital has a legitimately better methodology that doesn’t just lean on MPT, but embraces it and offers true asset diversification beyond a simple ETF mix based on a risk profile. Maybe money can’t buy happiness, but it can certainly get you a superior digital advisory service.”

Investopedia Robo-Advisor Rating Methodology

“Investopedia is dedicated to providing investors with unbiased, comprehensive reviews, and ratings of robo-advisors. Our 2020 reviews are the result of in-depth evaluations of over 20 robo-advisor platforms, including the user experience, goal-setting capabilities, portfolio construction, costs and fees, security, mobile experience, and customer service. You can read our full robo-advisor rating methodology for a much more in-depth explanation than the summary below.”

Overall Star Rating Explained

With the individual investor in mind, we took a critical look at the services and technology provided by robo-advisors. We organized our methodology into nine categories, scoring each advisor across multiple variables to rate performance in every applicable category. The score for the overall award is a weighted average of the categories.

EVALUATION CATEGORIES
Review Category Weighting Variables
Account Setup   5% 6
Goal Setting 15% 4
Account Services 10% 8
Portfolio Construction 15% 7
Portfolio Management 20% 4
User Experience 15% 6
Customer Service   5% 5
Education & Security   5% 6
Fees 10% 5

The Review Process

To evaluate these platforms, we sent questionnaires with over 100 queries to the participating Robo-advisories. Most of the companies we reviewed gave us socially-distanced video demonstrations of their platforms and services during August 2020.

From the questionnaires, the hands-on testing of the platforms, and the platform demonstrations, we scored each category and then combined the category scores into an overall rating for each Robo-advisor. Each category covers the critical elements users need to thoroughly evaluate a Robo-advisor.

TD AMERITRADE  https://www.tdameritrade.com/home.page

I use TD Ameritrade for all my free information. In other words, if I want to know where the best REITS are or the highest paying dividend stocks I use these guys. They have a huge array of information for the stay at home investor like me.

Put your cursor on any of the above and left-click. There’s your free information.

Interactive Brokers https://www.interactivebrokers.com/en/home.php

Although I have stocks in TD Ameritrade, I keep my biggest dollars in Interactive Brokers. The reason is they have cheap money to loan at rates between…

Rated Lowest Margin Fees1 by StockBrokers.com


Margin rates as low as 0.75% Learn More     just 

US Margin Loan Rates Comparison2

$25K $300K $1.5M $3.5M
Interactive Brokers3 1.59% 1.25% 1.01% 0.86%
E-Trade 8.45% 6.95% 5.45% 5.45%
Fidelity 7.82% 6.57% 4.00% 4.00%
Schwab 7.82% 6.57% N/A N/A
TD Ameritrade 9.00% 7.50% N/A N/A

I like TD Ameritrade for information because it’s easier for me to navigate. In other words, if it’s not simple then I have trouble using it. IB (Interactive Brokers) executes by trades easily and If I decide to leverage my bet you can see what their rates are above.

Traders Money Interactive Brokers

If I put up $25,000 then IB will loan me $75,000 for a day trade, assuming I want to trade. By the end of the day, I must clear my account or IB will c

 

Best Mortgage finding Apps

Bank Rate will show you what you need to know  https://www.bankrate.com/

There are many ways to find the best rate. So it’s not like the information isn’t already out there for anyone to find.

My friend just got a 2.5% mortgage rate on a 30-year loan for about $200,000 from Bank of America. To get that you must have an A credit score over 750 (FICO) and been on the job for years, she has, and have the best debt to income ratio. BOA charged her $5,000 to get this loan which is well worth it.

Wells Fargo Bank is the biggest mortgage lender in the country and also one of the toughest to get a loan with. In other words, don’t use them unless you already have a relationship or you just have to go with the biggest lender.

NERD WALLET    https://www.nerdwallet.com/?trk=nw_gn_5.0

Check out Nerd Wallet for some good ideas on investing. In other words, They give you FREE information on the best category from banking to credit cards.

Here are their top investments

12 best investments (left click on the below links)

1. High-yield savings accounts

2. Certificates of deposit (CDs)

3. Money market funds

4. Government bonds

5. Corporate bonds

6. Mutual funds

7. Index funds

8. Exchange-traded funds (ETFs)

9. Dividend stocks

10. Individual stocks

11. Alternative investments

12. Real estate

BEST ROBO ADVISORS

Nerd Wallets’ best Robo advisors is an example.

13 Best Robo-Advisors of December 2020

Andrea CoombesDecember 11, 2020

“Many or all of the products featured here are from our partners who compensate us. SoThis may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own.”

Summary of Best Robo-Advisors of December 2020

Betterment and Wealthfront are their top picks from Nerd Wallet

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