AI Investing: 5 Ways AI Will Change Investing

When it comes to artificial intelligence (AI), the tides are changing, and not just because of advancements in technology. Just take a look at the shift in perceptions towards AI and you’ll see how much the landscape has transformed in the last few years.

In 2023, 60% of people have positive feelings towards AI, according to a recent Magnifi survey. That’s up from just 25% in 2018 (1).

These positive feelings aren’t unfounded. AI can help you do a lot more than chat with a bot or play your favorite ambient sounds with a verbal command. The proof: AI investing assistance helps investors build and manage their portfolios (and ultimately reach their financial goals) right from home. How?

Here are five unexpected ways you can use AI to invest at home—a place where you can maintain your freedom while getting the guidance you need to make wise, educated money moves.

1. Ask questions about the stock market without fear of judgment.

The stock market is notoriously gatekept. Perhaps the most insidious blockade is the jargon that keeps out everyday investors. If financial language evades you, you’re not the only one.

Magnifi asked investors what would stop them from independently investing in the stock market—41% said a lack of knowledge or confidence would be a key deterrent. So how do we get past that fear?

Later on, when asked how AI can help them make the best financial decisions, 15% of respondents said it can help them understand complex financial terms. This is big. AI opens the doors for investors who may not have otherwise been able to access the markets.

For an example of this in action, take a look at Magnifi Personal, an AI investing assistant that uses natural language search to answer your investing questions—however simple or complex.

Here’s an example of a conversation with Magnifi Personal:

2. Figure out how to invest a little bit of money at a time.

Fact: You can start investing with just a little bit of money.

A lot of people think you need to have loads of money to start investing. This myth has a tangible impact on peoples’ lives. In a survey, when Magnifi asked respondents what stops them from independently investing in the stock market, 42% believe they don’t have enough money.

This notion can’t be further from the truth. The whole point of investing is to reach your financial objectives and increase the quality of your life, whatever that entails. You can do this even if you’re starting from scratch.

One way Magnifi Personal enables investing with a little bit of money is by offering fractional shares, or portions of a single stock of a company or fund. Magnifi Personal can help you figure out the best way to allocate whatever money you have available to invest in a way that aligns with your goals.

Whether you choose to purchase full or fractional shares (or both!), AI assistance can show you where to focus your investments to maintain diversification in alignment with your unique risk tolerance. Don’t think limited capital prevents you from being able to grow your wealth. AI lets you bypass that obstacle.

3. Create a flexible investing strategy based on your goals.

A group of survey respondents answered the question, “How can AI help you make the best financial decisions?” Of them, 17% said they would use AI to monitor investments to stay on track for financial goals.

Life is not set in stone, and it’s important to remain flexible throughout your investing journey. Whatever you’re striving for, it’s important to monitor your investments over time.

On one hand, this is due to factors like portfolio creep, or the shifting of assets in an investment portfolio as you earn returns. On the other hand, you may have been investing for one thing but ultimately decide to use it for another. For example, you may have hoped to buy a second home, but changed your mind to use that fund to further your child’s education.

Magnifi Personal flow guiding you through how much you need to save to pay for college.

AI can help you remain on track or change your goals without a complete portfolio overhaul.

4. Get professional-level insight into the ever-changing markets.

When it comes to managing your money, it’s hard to recognize who you can go to for advice. After all, knowing who you can trust is a tough job when so many sources of information have ulterior interests and motives.

Magnifi’s survey tells us only 9% of people trust professional news sources when it comes to investing advice. Meanwhile, another 9% get advice from an online blog or forum.

Where does that leave the remaining investors?

You can go to your friends and family, but there’s no guarantee their advice is right for you—because money is personal. Or you can go to a financial advisor, but the costs can eat into your profits and stall the process of reaching your goals.

AI investing assistance bests the accessibility of friends and family as well as the reliability of financial advisors. For example, you can access Magnifi Personal any time, ask it any question, and be certain it’s giving you a fair answer without having to worry about things like commissions or up-sells.

For example, here is a comparison of three dividend equity funds using Magnifi’s comparison tool:

5. Practice risk management.

You don’t have to be a financial planner to understand and practice risk management.

The Securities and Exchange Commission (SEC) says risk is “the degree of uncertainty and/or potential financial loss inherent in an investment decision” (2).

As a result, risk management is the practice of identifying potential risks and taking steps to mitigate them.

Risk management becomes a bit more of an active process in an uncertain economy, but it doesn’t mean you have to stop investing. Many investors understand this, with 46% of Magnifi survey respondents saying they’re planning to invest more in 2023 because of the economy.

Fortunately, AI can help you practice risk management by helping you:

Maintain a diversified portfolio by showing you areas of concentration (3)
Adjust your portfolio to reflect a reduced or increased risk tolerance
Shift investments as you get closer to a goal, so your money is ready for withdrawal when you need it and not locked up in a volatile market

Invest with AI like a pro

The AI conversation is not about what it can do. It’s about what AI can do for you. In this case, AI can help you invest in a way that fits you best and take the stress out of some of your biggest money decisions. Invest with AI in some of the ways we described and see how it changes the trajectory of your financial goals.

References:

“Share of people who agree they trust artificial intelligence in 2018, by country,” Statista, https://www.statista.com/statistics/948531/trust-artificial-intelligence-country/
“What is Risk?” U.S. Securities and Exchange Commission, https://www.investor.gov/introduction-investing/investing-basics/what-risk
Diversification does not guarantee a profit or protect against a loss in a declining market. It is a method used to help manage investment risk.