I always thought of mutual funds as easy and simple ways to get exposure to a variety of asset classes for a small annual fee called the expense ratio.

Over the years, Ive invested in mutual funds via my 401(k), IRA, and regular investments. With my IRA and regular investments, Im pretty sure I was diligent about checking expense ratios before investing. For my 401(k), not so much.

If youre like me, when you started your first job out of college, moved to a new city, signed up for health care, and tried to get up to speed on that new job. choosing your 401(k) investments, unfortunately, took a back seat to all of that other stuff. And by back seat, I mean, who really wanted to think about expense ratios and look over prospectuses after all of that? After years have passed and youve put in thousands of dollars into your 401(k) account, you start wondering, what the heck is even in that account and how much am I losing to fees?

Enter Personal Capital

I recently discovered Personal Capital. a company that allows you to import all of your investment balances into their tool, which analyzes a variety of aspects of your portfolio:

1. Expense Analysis. How much are you paying for your investments? This was really helpful for me because in addition to seeing your weighted average expense ratio in the aggregate (0.66%), I was also able to see the expense ratio of each individual fund and boy was that enlightening (read: it scared the poo pourri out of me).

Their 401k Fee Analyzer also allows you to see these fees over time and model out how much of your earnings you actually lose to fees. This is extremely helpful because its tough to put into context what a 0.66% expense ratio actually means in the grand scheme of things. However, when they tell me that ongoing expense ratio equates to losing 21% of my earningswell, I think I start understanding.

2. Asset Allocation. With so many different accounts (at least for me), its hard to see your overall asset allocation all in one place. You could make a spreadsheet. but why? Personal Capital provides this to you for free and also gives you alerts where you may be over-invested or underinvested. Note, Personal Capital does provide you with the below snapshot with balances and percentages (I just didnt want to include mine for fear of being made fun of).

Bottom Line

It was immensely helpful for me to go through this analysis, which took all of 10 minutes. Importing my accounts into the Personal Capital tool helped me realize the following:

1. High Expense Ratio Funds. The expense ratios on some of my mutual fund investments are way too high and its not like theyve been outperforming my other funds, which have much lower fees. The surprising thing was not only were these high fee funds in my 401(k), but I identified some that were in my IRA and regular investments as well (which I *thought* I had reviewed).

ACTION. Sell these high expense ratio funds and put the money into other attractive funds that have much lower expenses, among other things of course  expenses arent the only attribute Im looking at when investing in a fund.

2. Too Many Accounts. I have too many accounts it should have only taken a regular person 5 minutes to do this exercise.

ACTION. I need to close and consolidate some accounts. This means closing unnecessary checking and savings accounts and rolling over IRA accounts to the same provider.

3. Legacy 401(k). While were on the subject of too many accounts and retirement planstheres no reason for me to have my old 401(k) sitting in my prior employers plan. The fees are generally higher and the choices arent as good. Stop being lazy damn it!

ACTION. Roll over legacy 401(k) into the same provider as my current 401(k). If I like my current asset allocation, I can choose similar funds with my new provider.

If youre interested in getting a better understanding of whats in your investment accounts, take 10 minutes to sign up for Personal Capital here and find out! Its free!

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