Is Your Investing Strategy On Track?

Effectively balanced risk and return is the hallmark of any successfully managed investment portfolio. But, how do you know what the appropriate balance of risk and return is?

A look across Personal Capital user data shows that the significant number of the company’s free software users assume far too much risk through inefficiently allocated portfolios, hold too much cash and are overinvested in slow-growing mutual funds. To remedy this, the company designed a feature, called Investment Checkup, to help you effectively measure risk and return for yourself and see if you’re truly on track to hit your investment goals.

The Investment Checkup gives you a complete picture of your financial life in one place—and determine exactly what you should do with your investments to avoid these and other mistakes, maximize gains and meet your personal financial goals in the decades between now and retirement.

So how does the Personal Capital Investment Checkup work?

Setup.First, make sure your investment accounts are linked to your Personal Capital Dashboard.  Then, navigate to Investment Checkup on the “Investing” dropdown list on the top navigation bar of Personal Capital. If you’re a new client, you’ll be prompted to fill out some questions in your Investment Profile – which help to make sure that our suggested target portfolio is tailored to your life.

Calculations.The algorithm takes inputs from your risk profile and long term plans to calculate the right mix of asset classes that would optimally place you on the efficient frontier.  Then, it calculates how closely your strategy maps onto a target allocation and how much your current portfolio is costing you in fees (displayed in the COSTS tab of the Investment Checkup).

Output.Finally, it shows you results.  As shown in the chart below, it kicks off by sharing your optimal allocation — your “Target Allocation” — and based on our calculations, how closely your current allocation maps onto your Target Allocation. 

Then, it shows you more detail about the results of our comparative analysis of your portfolio versus an optimized portfolio.  Specifically, it shows how the allocation, historical performance, future projections and risk and return stack up. 

Free Financial Advice for Every Household

The first goal of the Investment Checkup feature is to provide insight on the fundamentals of what makes a sound investment strategy.  The second goals are personalization and transparency; not only does the tool give you the right frameworks to understand intelligent investing strategy, but it takes these frameworks and applies them to your own money.

The Investment Checkup is the first investment tool that gives you a completely personal and data-driven analysis of your long-term financial health.  This comprehensive review is now available to you at no cost at Personal Capital.

Personal Capital Advisors is an SEC registered investment advisor. Any reference to the advisory services refers to Personal Capital Advisors. SEC Registration does not imply a certain level of skill or training. This communication and all data are for informational and educational purposes only. You should not rely on this information as the primary basis of your investment, financial, or tax planning decisions. You should consult your legal or tax professional regarding your specific situation. Third party data is obtained from sources believed to be reliable. However, PCAC cannot guarantee that data's currency, accuracy, timeliness, completeness or fitness for any particular purpose. Past performance is not a guarantee of future return, nor is it necessarily indicative of future performance. Keep in mind investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.