You tracked the right funds, researched hard to get the hot stock, scanned various bank websites to get the lowest interest rates on your home loan and, last but not the least, hired an advisor to make the right choices. However, 10-15 years on, when it was time to get the returns, you find that you have lost track of your equity-linked saving schemes you bought every year to save tax, or that the value of the funds you bought have fallen way below your target. As you rummage through your old diaries and scan your Excels to get the answers right, you realize that the pieces are lost amid the dust settled on your paperwork over the years. So, after all the efforts you put in, what went wrong?
Graphics: Yogesh Kumar / Mint
Just as backstage preparations are the key to the real show, keeping track of your investments is the only way you can open the doors to the returns you deserve to get.
Why online tools
The market is throwing new investment avenues to make your portfolio richer, which, in turn, makes managing it that much more difficult.
With the number of bills and insurance premiums you need to service going up, the chances of defaulting and getting slapped with huge fines are also high. Keeping track of finances can involve remembering multiple login IDs, passwords and personal identification numbers. Besides, there are mutual fund net asset values to track and stock prices to monitor. So, what is the way out? One effective way is to opt for online financial tools, which helps you manage your money and provide you financial planning services, apart from other features. You can also treat them as a one-stop shop for all your investment details and follow up. Though some banks provide some of these services, online financial tools are a step ahead.
Says Devan Shah, head (business), Money Mentor, a company that creates information and software tools for financial companies: “Today an individual has multiple bank accounts and credit cards, and various investments in mutual funds and stocks. Keeping track of all these the traditional way is difficult. Hence, the need for financial tools.”
What you get
Personal finance tools offer three basic services.
Account aggregation: This facility lets you view all the accounts you may have with banks, credit cards, insurance, fixed deposits and public provident fund at one place. This saves you the trouble of remembering multiple passwords and login IDs.
To do this, you need to import data from all these accounts to the online platform. You can do so by forwarding your statements to the online tool you are registered with. Another option is to give the tool automatic access to your information with respective institutes by passing on some details of your accounts. The last option is to manually feed the numbers, much like you would do in an Excel. You can leave the rest to the system to take care of. For example, if you update the information on different loans you may have, the system will track the total debt in your name.
View your investments: You can track your overall portfolio through this facility. It gives a real-time view of your stocks, mutual funds and other investments. Most websites offer this facility free of cost. You are required to enter basic details of your investments, such as the date on which you bought or sold them, the cost price and the number of units.
Based on this information, the site will even compute your income-tax and capital gains tax. The website would also send you daily updates on email on the latest value of your overall portfolio. You can also get asset allocation charts and can see your exposure to various companies, industries or sectors.
Budgeting and alerts: The software can help you analyse your income and expenses and understand your spending pattern. It also provides you a budgeting tool, which will alert you every time you exceed your budget under a particular head, say, entertainment. You can also set a reminder to alert you about due dates for bills and premiums. Most sites give you tips on financial planning.
What it costs
While most online financial tools are available free of cost, a few websites have specific charges for certain tools.
Word of caution
Before you enroll for a site, here’s a word of caution. Don’t forget that whenever you share sensitive financial information, you carry an inherent risk. Always make sure that the site you are using doesn’t store information on its server but on your machine and that, too, in an encrypted format.
“If someone is bent upon misusing data, you can’t do anything about it. But tools that can be downloaded on the desktop seem to be safer than the ones where you need to store your information on the service provider’s server,” says Shah. Desktop download means that data is stored on your desktop, and can be seen only when you connect to the Internet. Also, check how long the site has been around. It may be dangerous to trust anybody with your data. Remember that online financial frauds are on the rise.