Using AI for your financial future

New Indian Express

3 days ago

Technology is a disruptor for some, and for others, it is a tool. Those disrupted will ponder the pros and cons, the need for that disruption and its impact on their lives. The rest will take new technologies in their stride and move forward. Whatever category you belong to, you need to adapt to those changes. While at work, there is fear of losing a job as Artificial Intelligence, Machine Learning, and other technologies are making human-led work processes redundant. You must remember that the fear of technology is due to inadequate knowledge. You are unaware of the use.
From a personal finance standpoint, there is a lot of merit in using technology to expand the scope of your knowledge. That has been the Achilles heel for people who want to participate in their financial future. There is a lot of boredom associated with the word 'finance'. If there is a cognitive overload, it leads to avoidance. Too much information thrown at you creates a tendency to ignore and avoid. Despite all the campaigns on mutual funds and insurance thrown at you, the penetration of these products per 100 people in India is the lowest among the top 20 countries in the world.
You can use ChatGPT or any other artificial intelligence tool to simplify something that you think is complex. These tools will help you make sense of acronyms like REIT (Real estate investment trusts) or ULIPs (Unit-linked Insurance plans). The trick is to enter the prompt that best describes your query or the situation. You can be specific, like 'Create a retirement plan for a 35-year-old earning Rs 1 lakh per month'. The AI tools may not be accurate, but they can give you a sense of direction and a basic understanding when you meet your financial advisor and discuss the specifics, which will save time. You must not act directly on the answers you get from artificial intelligence tools. The free versions of those tools have not been updated to date. The premium versions are updated to the extent that free information is available online. A lot of quality content is behind a particular paywall. You cannot just rely on the results you get for your queries in AI tools.
Besides ChatGPT-type tools, some fintech companies offer personal finance services, such as portfolio creation or management. If you are a direct investor, you can use AI tools to create a portfolio of fundamentally strong companies for the long term. You can apply the same tools for a mutual fund portfolio. The same philosophy applies here. You cannot just rely on these firms or tools for financial advice. In addition to technology, you should work with a professional financial advisor.
The best part of AI tools is that they can help you with discussions you could have with your financial advisor. You can discuss the current financial situation, such as interest rates, stock prices, or an asset allocation plan. The meeting will be far more meaningful than a monologue from your advisor about the discipline of investing and you simply following the suggestions made by the advisor.
By arming yourself with knowledge, you can participate in investment decision-making. Understand your ability to take risks. Know more about ways to boost your income. If you and your spouse work, you can discuss the state of household finances with a specific asset allocation plan. It is essential to follow a balance between active and passive investing. Your understanding of that can grow multi-fold if you use AI tools. The RBI committee cut key borrowing rates recently, which would impact your money and investments. If you do not understand the jargon in the media, you can look up AI tools to simplify.