We’ve been participating (or at least trying to) in the FIRE (financial independence and retire early) movement for quite some time now. We have a portfolio of long-term retirement investments, but we also like to have a good amount of cash available for any emergencies. Of course, cash doesn’t generate nearly as much as a traditional investment, so it’s important for us to put this cash to work as best we could.
Historically, CDs have been a good place to park cash, but these days, rates barely beat a savings account, and you can’t touch your cash for an extended period of time. We spent a few days researching the best place for our cash—without putting it at risk—and we found the best option for us: Personal Capital.
(Note: Although we use Personal Capital to store cash and monitor our high-level net worth towards our FIRE goal, you can only reach FIRE by having rich parents or following a detailed budget. We have a detailed budget. If you’re interested, learn about our budgeting solution in our forthcoming post about ‘you need a budget (YNAB).’)
We’ve grown to love Personal Capital which offers digital financial tools, banking, and wealth management services to grow our money. Caveat upfront: We only use Personal Capital for its financial tools and banking services; we do not use its wealth management services, though we’ve been tempted to call for a free consultation. Here’s what we love about Personal Capital:
We can obsessively monitor our overall net worth on our iPhones.
We downloaded the Personal Capital app on our iPhones. It takes time upfront to set it all up, but it’s completely worth it. To get an accurate picture of your net worth, use the app to link all of your checking, savings, investment (e.g., brokerage, IRA, 401k, TSP, etc.) accounts. If you like tracking your home and/or other real estate investments as part of your net worth, you can add these addresses to get an estimate of your home’s current value through Zillow. You can also link to any mortgage accounts, so you get a better picture of the total equity you have. Once you make these initial links, the Personal Capital app goes on autopilot, and everything automatically updates whenever you open the app.
Before the Personal Capital app, we had to log into ~5 different banks to get a full picture of our net worth. Now, we simply open up the app and see exactly what our net worth is today. As you scroll, it breaks down your net worth into buckets such as cash, investment, credit card, mortgage, and other loan accounts. We can click into any of the accounts to see the most recent transactions—all in one place. Now it’s easy for us to obsess over our net worth and progress towards our FIRE goals. It’s actually super motivating.
We can get a high-yield interest rate from Personal Capital’s savings account.
While tracking our finances is great, we were still looking for a place to put our cash that could earn a high percentage rate with no risk. That’s when we learned about Personal Capital Cash through the app. Personal Capital offers a high-yield savings account. Frankly, it was the highest that we found that didn’t require you to be a millionaire to open an account.
At the time of writing this, Personal Capital Cash is offering a 2.30% APR; for those who are Personal Capital clients (i.e., you have a wealth management account with them), you can get 2.35%. 2.30% is extremely competitive when compared to other major banks. Most recently, we had our cash tucked away in Discover and CapitalOne accounts that were earning right at 2.00%. When we learned that Personal Capital had such high rates, we quickly transferred our money over. The even better news is that the accounts are FDIC-insured up to $1.5 million (which is much better than the standard $250,000 limit most banks offer).
Personal Capital is also one of the few high-yield accounts that have no minimum to open an account and no fees. You still get the great 2.30% rate regardless of your starting balance. If you know of a better deal, please add it to the comments, but this is by far the best place we’ve found to park cash risk free.
There are plenty of other features to help achieve your financial goals.
To be honest, those are the two primary reasons we use Personal Capital. It offers a number of other features that we don’t currently use, but are available. For example, it also has a budgeting feature. We’re sure this is a solid feature, but we are already in love with our YNAB system because it offers a much more detailed look at our monthly budget.
In addition to budgeting, Personal Capital offers access to financial advisors and other wealth management services. We’ve strongly considered trying them but haven’t yet used these services because of how we’ve currently organized our investments and assets. Perhaps if we do so later, we will update this post!
They’ll give you $20 to try it risk-free!
It doesn’t cost anything to use their app, so it’s definitely worth downloading to see if it’s something that will help you achieve your financial goals. Use our referral link when you register, and if you link an investment account (e.g., brokerage, 401k, IRA, etc.) with a balance of more than $1,000 within 30 days of registering, you’ll get a $20 Amazon gift card and so will we! You don’t have to transfer any money, this will simply allow you to view your investments in one spot. And, if you have some extra cash making less than 2.30%, definitely park it with them and put it to good work!