Personal Capital's asset allocation - Is the tool worth the complication?

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optionengineer
Posts: 10
Joined: Wed May 17, 2017 7:23 am

Personal Capital's asset allocation - Is the tool worth the complication?

Post by optionengineer » Thu May 18, 2017 6:42 am

Hey everyone,

I'm sure this has been posted here before, and for that I apologize, but I wasn't able to find any useful results using the search bar (I tried, I promise!)

I love Personal capital for monitoring my AA across all my accounts, the retirement planner tool, and looking at cash flow.

I am looking to simplify my financial life as much as possible, and so I am deciding on how to proceed with asset allocation. My psychology likes to tinker with everything (lifelong engineer...), so I can see some intrinsic benefit of adopting Personal capital's high level asset allocation, as it keeps a consistent target for me.

The target allocations I am comparing are:

Most Aggressive:
Cash: 0.5%
US Stocks: 60.2%
Int'l Stocks: 25.8%
Alternatives (real estate): 10.5%
US Bonds: 2.2%
Int'l Bonds: .8%

Aggressive:
Cash: 1%
US Stocks: 56.5%
Int'l Stocks: 24.1%
Alternatives: 10.5%
US Bonds: 6.2%
Int'l Bonds: 1.8%


The reason I am considering adopting this overly complicated asset allocation is to be able to use PC's tools like the investment checkup: https://www.screencast.com/t/KBpdF33tJ1 and the retirement planner: https://www.screencast.com/t/cI7XJqND

On the other hand, I don't like the 10% allocation to real estate, especially given that the AA doesn't take into account all the equity I have in my house. :oops:

Who uses Personal Capital, but adopts a different allocation than their suggestion? Do you just ignore their constant reminders to rebalance? Does it make sense to anyone here to adopt this type of an AA, or is it just trying to be special to rope us into their advisory service (no way, no how)?

Thanks in advance guys!

Ron
Posts: 6132
Joined: Fri Feb 23, 2007 7:46 pm

Re: Personal Capital's asset allocation - Is the tool worth the complication?

Post by Ron » Thu May 18, 2017 7:22 am

Don't confuse your home with commercial real estate (REIT), which is only part of what PC's Alternatives represent.

Per PC:

"In the Investment Checkup, Alternatives are intended to represent highly liquid assets outside of stocks, bonds and cash. This includes things like Real Estate Investment Trusts (REITS) and commodity exposure available through ETFs such as gold or oil."

While I use PC (along with a bunch of other "free" tools), I don't put stock in any tool's suggestion or demand that I must manage my investment portfolio in the manner that they portray. That's my decision, based upon my knowledge, opinion, wants and desires. PC tells me that my investment costs are out of line to what they suggest (.33 vs .15). However, I hold some managed funds that I've held for decades and I have no desire to eliminate them due to their performance over a long period of time.

FWIW...

- Ron
Last edited by Ron on Thu May 18, 2017 7:28 am, edited 2 times in total.

livesoft
Posts: 57209
Joined: Thu Mar 01, 2007 8:00 pm

Re: Personal Capital's asset allocation - Is the tool worth the complication?

Post by livesoft » Thu May 18, 2017 7:25 am

This signature message sponsored by sscritic: Learn to fish.

headedwest
Posts: 20
Joined: Wed Dec 28, 2016 1:05 pm

Re: Personal Capital's asset allocation - Is the tool worth the complication?

Post by headedwest » Thu May 18, 2017 7:31 am

I use PC, but my asset allocation is more conservative and more international than their suggested version. By their Retirement Planner, I'm in "great shape" to reach my goals on schedule, and by their Investment Checkup, I'm still falling on the efficient frontier, but with 0.7 % less return in exchange for 2.1% less risk. So, that's reassuring, but I'm not sure how meaningful it is, given their underlying assumptions about future performance. I love being able to see my asset allocation across various accounts held in different places, and that's the main reason why I use their site.

MnD
Posts: 3088
Joined: Mon Jan 14, 2008 12:41 pm

Re: Personal Capital's asset allocation - Is the tool worth the complication?

Post by MnD » Thu May 18, 2017 7:40 am

I use PC and it never even occurred to me to adopt their allocation model. Suggest you just ignore it.
Only one small section of the numerous displays and tools compares your AA to a model AA.

optionengineer
Posts: 10
Joined: Wed May 17, 2017 7:23 am

Re: Personal Capital's asset allocation - Is the tool worth the complication?

Post by optionengineer » Thu May 18, 2017 9:31 am

livesoft wrote:See also:
viewtopic.php?t=150267
Thanks for sharing this post! Good thoughts around the different AA management tools.

optionengineer
Posts: 10
Joined: Wed May 17, 2017 7:23 am

Re: Personal Capital's asset allocation - Is the tool worth the complication?

Post by optionengineer » Thu May 18, 2017 9:31 am

MnD wrote:I use PC and it never even occurred to me to adopt their allocation model. Suggest you just ignore it.
Only one small section of the numerous displays and tools compares your AA to a model AA.
Good call - It never made me comfortable holding REITs aside from their exposure in VTI.

student
Posts: 1382
Joined: Fri Apr 03, 2015 6:58 am

Re: Personal Capital's asset allocation - Is the tool worth the complication?

Post by student » Thu May 18, 2017 3:23 pm

I use Personal Capital to keep track of my investments and look at my asset allocation. I also compare it to one from Fidelity. I do not consider its advice though.

User avatar
CyclingDuo
Posts: 915
Joined: Fri Jan 06, 2017 9:07 am

Re: Personal Capital's asset allocation - Is the tool worth the complication?

Post by CyclingDuo » Fri May 19, 2017 8:47 am

optionengineer wrote:Hey everyone,

I'm sure this has been posted here before, and for that I apologize, but I wasn't able to find any useful results using the search bar (I tried, I promise!)

I love Personal capital for monitoring my AA across all my accounts, the retirement planner tool, and looking at cash flow.

I am looking to simplify my financial life as much as possible, and so I am deciding on how to proceed with asset allocation. My psychology likes to tinker with everything (lifelong engineer...), so I can see some intrinsic benefit of adopting Personal capital's high level asset allocation, as it keeps a consistent target for me.

The target allocations I am comparing are:

Most Aggressive:
Cash: 0.5%
US Stocks: 60.2%
Int'l Stocks: 25.8%
Alternatives (real estate): 10.5%
US Bonds: 2.2%
Int'l Bonds: .8%

Aggressive:
Cash: 1%
US Stocks: 56.5%
Int'l Stocks: 24.1%
Alternatives: 10.5%
US Bonds: 6.2%
Int'l Bonds: 1.8%


The reason I am considering adopting this overly complicated asset allocation is to be able to use PC's tools like the investment checkup: https://www.screencast.com/t/KBpdF33tJ1 and the retirement planner: https://www.screencast.com/t/cI7XJqND

On the other hand, I don't like the 10% allocation to real estate, especially given that the AA doesn't take into account all the equity I have in my house. :oops:

Who uses Personal Capital, but adopts a different allocation than their suggestion? Do you just ignore their constant reminders to rebalance? Does it make sense to anyone here to adopt this type of an AA, or is it just trying to be special to rope us into their advisory service (no way, no how)?

Thanks in advance guys!
Whether you use Vanguard, Fidelity, TIAA, Personal Capital, or (insert your favorite AA monitoring site) - you answer the investor profile questions, it gives you your current AA and suggests a Target AA based on how you answered the questions. You don't have to follow the suggested Target as some of those questions are wide ranging and nebulous at best.

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