AI is no longer the future; it is already here and profoundly reshaping every sector, including personal finance. AI chatbots such as ChatGPT are already used by millions of people daily to resolve the majority of online tasks. It is advanced and free personal assistance, and it can analyze and provide useful insights to build personalized savings and investment strategies.
AI is no longer limited to only certain tasks; it can help in budgeting, savings, investments, risk management, and improve the overall future of its users. So, how to use AI wisely to your advantage to develop and implement the best money-saving and investment strategies? Let’s find out below.
AI – The future of personal finance
AI is a program that is based on our brain neuron principles. These programs can learn similarly to our mind and enable decisions without pre-programmed rules. Traditional programs have hard-coded rules and only follow these instructions, while AI models learn patterns and can operate in a new environment that was not there during the training process.
AI in finance
AI is most actively used in financial markets, where the majority of trading activities are done through advanced algorithms. AI is also popular in financial trading, especially in crypto markets. AI trading platforms are among the most well-known examples, which help beginners and professionals analyze markets at high speed and precision. Modern trading platforms like MetaTrader 5 and TradingView support AI algorithms, and there are many AI-powered bots and market analysis indicators available both free and paid.
Apart from trading, AI powers many modern websites and applications, providing personalized market analysis and suggestions. It enables a quick analysis of vast data and detection patterns that are not possible for human traders.
Using AI to save money
AI has become a cornerstone of many modern financial budgeting and planning applications and platforms. Apps like YNAB, Cleo, and Mint aim to help users with their budgeting. However, ChatGPT and other advanced chatbots are almost equally as powerful in providing useful insights and techniques to save money for financial investing and personal financial freedom. Modern AI-powered tools can analyze personal spending patterns and provide useful insights to improve savings and have more capital to invest in passive income assets like dividend stocks. They can negotiate bills, automatically track subscriptions, and provide extensive analysis and reports.
Overall, AI can be very useful to reduce wasteful spending. There was a report from an AI user where he tried to use ChatGPT to get a sale on his dream smartphone, and AI successfully negotiated the best price, saving him several hundred bucks in the process.
Using AI for smarter investment decisions
Another field where AI has huge potential is investments. Anyone can use advanced AI models to find out the best sectors for investments. Robo-advisors provide investors with insights and can help in making highly successful decisions. Anyone can employ the power of AI models to adjust their portfolios and analyze the risks of their investments. Another interesting intersection between AI and finance is predictive analytics in stocks, crypto, and forex markets. AI models can detect patterns that would be nearly impossible for human investors. Modern microinvesting platforms are often equipped with AI models to provide a better investing experience and provide insights about markets. For example, popular app Robinhood already incorporated AI in its services to provide a better experience.
Limitations of AI in finance and investing
AI is a powerful tool that can analyze vast amounts of data to detect patterns and increase the accuracy of investors when picking stocks and other investments. However, it has its limitations, which are important to know. Overreliance on algorithms is a serious risk as AI sometimes can produce nonsense or incorrect results, which can lead to bad investment choices. The market is like a living organism, and it is mostly unpredictable, making it difficult to guess which way it will go. Not even AI can guarantee profits, and investors should be very careful and always check themselves.