If you’ve listened to the 31-Day Money Challenge, you know that Personal Capital was one of our sponsors. I was happy to have them sponsor the series because I’ve used Personal Capital for quite some time, and I like the tool a lot.
Personal Capital is a free online tool that lets you connect all of your investment accounts – 401(k)s, IRAs, taxable accounts, brokerage accounts, etc. And then you can check all your accounts at Personal Capital to easily see how your investments are performing. It also shows your investment costs, including the cost of your 401k, which all Dough Rollers know is critial.
Personal Capital itself is great, and it has many different features. But here, we’re going to talk about a new feature: the Financial Sustainability Index (FSI). With the FSI, Personal Capital takes all of your information – your age, life-span assumptions, information from your connected accounts – and crunches the numbers to determine how much monthly income your portfolio could generate.
Here’s how Personal Capital describes the FSI:
The Financial Sustainability Index (FSI) is a personalized index that reveals your current financial reality, without relying on any assumptions or projections. Given your net worth and current market prices, the FSI measures the monthly income you can receive every month for the rest of your life starting today. This monthly payment will adjust with inflation to preserve your purchasing power and will not be affected by market fluctuations.
A picture is worth a thousands words–
Of course, this is an estimate. But the thing I like about it is that it takes your total portfolio and turns it into an understandable number. You can look at the number and get a rough idea of how much income your investments can generate on a monthly basis. It’s much easier to think about your retirement and how much you’ll need for retirement in terms of monthly spending.
Now, remember, this tool isn’t going to count in any Social Security, pensions, or annuities you may have purchased. It will only factor in the accounts you’ve connected to Personal Capital.
If you want to give it a try, check out Personal Capital.