Wrangling finances with Personal Capital

A year and a half ago I decided I needed to simplify my financial life. For years I had been using tools like Quicken and Moneydance to keep track of my finances. It was always a bit of a laborious process involving a couple of hours a month to do some manual data entry and categorization. The financial tool landscape had changed dramatically since I started doing this back around 1997 and it was time to take a fresh look at what was available to me.

Specifically I was looking for a tool to enable me to do the following with as little manual effort as possible:

  • View my entire net worth
  • See my cash flow month to month
  • Understand how I was spending my money
  • View how my retirement and other investments were doing
  • Quick auditing of my credit card transactions

An online tool was clearly the way to go, and there are now several. Sites like Betterment and Wealthfront are looking to actively manage your investments. I don’t mind paying for a service I find useful, but I wasn’t looking for active investment help. I’d already decided to move my IRA and brokerage accounts from Ameriprise to Vanguard1 specifically to decrease per-fund overhead and management fees so these weren’t a good fit for me.

The two free tools that seemed to satisfy my needs were Mint and and Personal Capital. Both provide a wholistic view of your financial portfolio by syncing with your financial accounts, although their objectives differ a bit. Mint is geared towards helping people budget their money but has fewer tools to assist with understanding your investments. Personal Capital on the other hand is focused entirely on your investments, and while it allows you to see how you are spending your money, it doesn’t have robust budgeting tools.

I dove into Personal Capital and my experience has been overwhelmingly positive. For the first time in decades I’ve finally been able to see the entirety of my financial portfolio at a glance. It gives me great tools to see how I am spending my money (hello there, restaurants, aren’t you a money suck), understand which of my investments have high fees, and see how diversified my portfolio is across several axis (eg: asset classes, US sectors).

The Investment Checkup tool can take a look at your portfolio and given some inputs like your age, risk tolerance, and goals, can make some recommendations on how to adjust your investments to decrease risk while maintaining your investment goals. It won’t do any of the rebalancing for you, but knowing where your portfolio needs some attention is great for making small changes over the year, or a yearly rebalancing.

The Retirement Planner lets you track to a customizable retirement goal based on inputs like current net worth, post-retirement expenses, and income events (eg: expected savings until retirement, social security income upon retirement). It then runs a Monte Carlo simulation to give possible outcomes based on those assumptions. This tool is incredibly useful for setting realistic expectations on retirement age and understanding what it will take to get there.

Personal Capital makes their money off their wealth management services. The free web tool — and it really is free, no ads or anything — is a hook to get you to sign up to their advisor service which, as you would expect, has a fee based on the value of your portfolio. Expect to receive a phone call a few weeks into using the tool for an up-sell to their advisor services. One also assumes that they are using the information collected from their free web tool in aggregate as a product as well, either for themselves or others. Remember: if you aren’t buying a product from a free service, you are the product of the free service.

Overall I heartily recommend Personal Capital to anyone who already has a good understanding of investments but is looking for some deeper insights into their portfolio2. It has given me some very useful information about my financial world and helped me make some informed decisions.


1 I highly recommend Vanguard, particularly their EFTs. I am super-pleased with their business philosophy and wide selection of low-cost EFTs & mutual funds.

2 As an extra incentive, Personal Capital has a referral program right now where if you sign up from this link we both get $20.

What if I had 3 months to live?

[I’ll preface this post by saying that I am in excellent health and expect to be rambling on this blog for many more years.]

During the drive back from British Columbia on our vacation this past weekend I got a bit introspective about death. You see, both my grandfather and uncle died from pancreatic cancer (and reportedly my great-grandfather did too) — it’s hereditary. There is no early detection and when you’re diagnosed in the later stages you have, on average, about 3.5 months to live. Treatment options are limited and can extend your life by a few months to a few years (see the 5-year survival rate). Oh, and did I mention it’s extremely painful?

On the plus side, there’s this gem from the American Cancer Society:

Almost all patients [who are diagnosed with pancreatic cancer] are older than 45. About two-thirds are at least 65 years old. The average age at the time of diagnosis is 71.

So as an almost-40-year-old I have a statistically safe 5 years before I need to be at all worried and a couple more decades before the odds start working against me. And it’s perfectly possible that I will never get cancer and live to a ripe old age.

But, what if tomorrow I was told I had 3 months to live… what would I do?

I’m making that list now and seeing which of those things I should start doing sooner rather than later.

 

Retirement is wasted on the old

Youth is wasted on the young.
Retirement is wasted on the old.

Retirement

Retirement. It’s the goal to which we all aspire. To gain enough financial security such that we no longer have to work for the rest of our lives.

When I started working at IBM at the height of the dot-com boom I had visions of retiring by the age of 30. Six months later the bubble burst and I was fortunate to have a stable job. What was I going to do when I hit 30 and was able to retire? I don’t know, but I knew that “retirement” was the goal.

For many people in the US, the magic age for retirement is 65 when Social Security kicks in to supplement your income. For others it may be a decade earlier.

But stop and think about it: why are we waiting to live until we’re old? Why do we think that when we reach retirement that we will be content not working? As someone in their 30s who has taken six months off work test-driving retirement, I’m here to tell you that we’re doing it all wrong.

Living in the now

I love to travel and have always assumed that I would do much more of it when I retired. And perhaps I will, but after doing quite a bit of traveling over the past 6 months I realize just how taxing it can be. Fast-forward to 30 years from now and how much more taxing will it be when I’m 68? Will I still want to be gone from home for weeks at a time? Will I still be able to hike up mountains? Will skiing in the winter still sound like fun? Will the mountains still have snow 30 years from now?

I want to take every opportunity to travel and live in the now while my body still works. While my knees don’t hurt. While I can still see and hear. While I can still remember things.

Every year I use up every single hour of my vacation and sick time. Some years I come skidding into the last few months with virtually nothing left and throw myself on the mercy of my manager to work from home for a few days around the holidays.1

It’s not enough.

A few weeks of vacation a year is not enough living, it’s still pinning hopes on retirement, biding time until that fateful day. I have to learn to live outside of vacation time, get more of it, or both.

Doing nothing is boring

One of the realizations that I had during my sabbatical was that I love to work. Perhaps not the 9-to-5 job in front of a computer for someone else, but I love programming. Creating something useful. Working with a team. Who’s to say that I won’t want to continue doing something like this after I reach retirement age?

What if retirement wasn’t “not working for the rest of our lives” but “working differently or working less” instead? My good friend John Martin retired over a year ago and has been doing some contract work for his prior employer. Not because he must, but because he enjoys it.2

Why can’t we have a better balance between work and living and stretch out both for longer?

Perspective

My uncle died last month from pancreatic cancer. He was 69. He went from diagnosis to dead in 5 weeks. His father, my grandfather, died from pancreatic cancer at 83. My grandmother tells me that my grandfather’s father also died from pancreatic cancer. As you can guess, it can be hereditary.

From the American Cancer Society:

Almost all patients [who are diagnosed with pancreatic cancer] are older than 45. About two-thirds are at least 65 years old. The average age at the time of diagnosis is 71.

I may not make it to retirement to begin living; I have to live now.


1 Thankfully, every manager I’ve had has been most forgiving with vacation hours. Also, I love working around Christmas and New Years because no one else is around which gives me tons of uninterrupted Maker time.

2 He recently came out of retirement for some great reasons.

A sabbatical is not a trial-run for retirement

A year ago when I first started planning my sabbatical I had the idea that I would use it as a trial-run for my future retirement. I know many people, many of them men, who work all their lives and yet when they retire they don’t know what to do with themselves. My Dad is one of those people. He has owned his own business, pouring himself into it, for the past 40 years. Now that he’s on the verge of retirement he seems to be at a loss with what to do with himself. I’m like my Dad in that I pour myself into my job. Could I use the time off from work to cultivate skills that I would ultimately need in my eventual retirement?

I’m here to tell you that while a sabbatical can be amazing and useful for cultivating some retirement skills, it isn’t a trial-run for retirement. The biggest reason for this is that a sabbatical has an end-date.

Retirement skills

Sabbaticals are great for identifying things that you need to survive retirement that your work currently provides.

The biggest eye-opener for me was how much I need to be involved in a technical pursuit. I love programming and working with a team, things that I primarily get to indulge in at work. After I started my sabbatical, however, I didn’t have anything technical that I could really sink my teeth into. After a couple of months I started back into volunteering with Distributed Proofreaders doing development work which really improved my overall happiness. Frustratingly, the pendulum swung too far and DP became work for a while which took some time to realize and correct.

Another thing that I really needed was time away from my significant other. I love Daniel, but unlike my parents who have spent almost every day together for the past 40 years running the family business, I need time away from my S.O. Having some time apart lets us do our own thing for a bit and then come back together later to share different experiences.

Yet another thing that became important to me was some structure to my day. When I am working I have a fairly structured schedule. I have some idea of what tomorrow will look like, at least in part. When you’re on sabbatical, and presumably when you’re retired, tomorrow’s calendar might not have anything at all on it. For some people that can be liberating. For those of us who thrive on structure, it is intimidating. For me I’ve discovered that while not every day needs a plan, that having some plan for some days makes it easier to enjoy the days when anything goes.

Not a trial-run: the end is coming!

If you only have a limited time off of work you’re likely to do a fair bit of traveling. Indeed that’s what I did, including a week at Critical Northwest, 2 weeks in the DC area, 3.5 weeks in Europe, 2 weeks in the Carolinas, and 2 weeks in Texas. We have plans to spend 2 weeks in the bay area next month and hopefully a week or more in Denver in March. That doesn’t include other smaller trips to Portland, the Tri-Cities area, and Sequim. For me at least, that amount of travel isn’t sustainable when I retire but I would have kicked myself if I hadn’t taken advantage of the time off of work. That much time away from home makes forging strong out-of-work social networks challenging — networks that I know I will need in retirement.

Knowing that there’s an end-date prevents you from committing to activities that will go beyond that time, such as volunteering with local organizations that have a weekly time commitment during the day, or investing heavily into a craft that will take over a room in your house.

Worth every penny

If you have the opportunity to take an extended leave away from work, I highly encourage you to take it. It may not be a trial-run for retirement, but you’ll have a great time learning more about how you derive happiness from work and ways to achieve that outside the office.