- Review: NextCapital
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Compare what your investments are doing now with how they could be performing, so you can get the most out of the stock market and find your alpha.
“Our focus is to help investors understand their assets in a way that isn’t out there in the market right now,” says Dirk Quayle, the founder of NextCapital. So what is NextCapital and how can it benefit your investment portfolio?
NextCapital grew from an investing app developed by Business Logic (where Quayle was the president) and is now a multi-featured tool that allows you to really dig into your portfolio performance.
If you’re chasing alpha — or if you just want to know how good an investor you really are — NextCapital can help you figure out how you’re doing.
How NextCapital Works
As with many similar web apps, you can easily important your portfolio data by entering your account information into NextCapital. Most brokerages are supported right now, so you can include just about any account you have.
Next, NextCapital organizes your information (automatically or manually entered) so you can figure out just how well you are doing. “Your portfolio performance is compared to a benchmark,” says Quayle. “Our program creates a benchmark for you, based on what’s in your portfolio.”
This way, you aren’t just getting an idea of how you perform compared to the overall market; you receive an idea of how well you are doing as compared to the types of assets you actually own.
“You can look at it by brokerage accounts, as well as break it down in other ways,” says Quayle. “We do really well with asset allocation. You can look at the various classes, and the app filters it down to show your exposure.”
This works with other breakdowns as well. NextCapital provides you with a way to customize your view, depending on what you are looking for. You can even look at your investments based on the specific goals you have. “Drill down into your portfolio to see how you are really doing,” Quayle says.
NextCapital also allows you to look at the latest developments related to your investments. “You can even filter the news you receive, based on what you have in your portfolio,” Quayle says.
NextCapital draws from Dow Jones and StockTwits, giving you access to the latest information. “We update all the time by ticker, and you can get updates on what’s relevant to you so that you can make better decisions about your portfolio.”
Organizing your information in NextCapital can also make things easier in terms of taxes. “You can separate accounts for tax purposes, or isolate certain accounts and transactions,” Quayle says. “You can see where you have gains, where you have losses that offset, and where you might need to pay long-term capital gains taxes versus short-term gains taxes.”
Overall, NextCapital is about looking at your portfolio performance, and then figuring out what you can do to improve your ability to invest.
Using NextCapital to Evaluate Your Investing Performance
One of the realities of investing is that we often think that we are better at it than we actually are. We tend to think we’re genius stock pickers, or that we’re doing “just fine” when it comes to our fund selections. NextCapital is a great tool for looking at how you’re really doing with your investments.
First of all, you can see how your investments are doing in relation to a comparable benchmark. Are you generating alpha? Could you be doing better with a different investment?
Next, you can figure out how effective your investing plan really is with the help of the NextCapital tagging system. “It’s possible to tag positions by the reason you bought,” says Quayle. “Did you buy on the recommendation of your favorite guru? You can tag that. Create these tags, and see how you do when you follow the advice. Maybe it’s time to look elsewhere for investing tips.”
NextCapital is very detailed, and shows you the picture in a comprehensive way that many other investing apps just don’t offer. “Drill into a specific brokerage account and see what all the positions are,” says Quayle. “Then drill into those positions to see how they are doing. You can customize by adding columns for industry, performance, alpha, realized versus unrealized gains, and more. You can even design a view to understand the risk involved with your portfolio.”
At first, it’s a bit overwhelming to use NextCapital because of all the data that can be thrown at you. However, once you get the hang of it — and it’s pretty easy to figure it out since the interface is fairly intuitive — NextCapital becomes addictive. You can look at different aspects of your portfolio, and get an idea of where you stand.
If you have multiple brokerage accounts, NextCapital can help you see what your total asset allocation is. When you try to manage several accounts at once, you might end up with too much overlap with individual investments and asset classes.
And, because NextCapital is updated every night, you can get an accurate view of your portfolio each day. When a trade goes through at a connected brokerage, your NextCapital account will reflect your new portfolio makeup.
Understand, though, that NextCapital is meant for information. “It monitors what you have already,” Quayle says. “You can’t complete transactions from our application.”
Right now, NextCapital is free to use, and it will remain free going forward. What will change is that the application plans to add premium services during 2014.
“We’re going to be expanding some features in the coming year, and we will be adding advice models and increasing tax functionality as well,” says Quayle. He also says that wealth forecasting, including Monte Carlo simulations, is on the way.
A Great Tool for Monitoring Investments
Overall, NextCapital is a great tool to help you see how you are doing, as compared to how you could be doing. With NextCapital, you can really get into the meat of your performance, and using the information to pinpoint where you could improve your abilities.
It’s about getting an accurate and in-depth analysis of your performance so that you truly understand what’s happening with your portfolio, and how you can improve your performance.
“We wanted to expand the data investors have access to, and make it understandable,” says Quayle. “If you go to other brokerages and try to understand your returns, it’s really terrible. You can’t find your positions easily, and there’s no concept of true performance.”
“We let you see what you might be leaving on the table,” Quayle continues. “We help you see what is happening, and why it’s happening so that you can figure out what doesn’t work, and what does, with your portfolio.”