There is plenty of buzz around artificial intelligence (AI) in the investing world. Many companies have been using AI technology to make the investing journey easier for investors.
A lot is happening with AI - put the keyword on Twitter and you will know how many people are talking about it. Out of everything going on with AI and investing, let us look at areas that may trend this year.
Trends in AI in investing
Below are some trends tied with AI in investing for 2023:
AI & personal finance
We have seen a significant shift in India in terms of retirement mindset. Today, a majority want to retire by the age of 40 by achieving financial independence. Traditional advisors are not for everyone since the hiring cost is high and they lack personalisation. People expect 24x7 guidance via chatbots, which are driven by natural language processing. All this is possible today - you only need to look for the right platform.
AI systems can help you in a great way with personal finance - budgeting. Before you invest, you need to learn to manage money. AI-driven personal finance apps can help you make data-based decisions rather than emotion-based calls. Once you can get a clearer picture of the expenses, savings become easier and you are ready for investment.
Portfolio creation and optimisation
The biggest challenge for investors over the decades has been equity investing. For gold and debt, most investors are sorted in decision-making, as they know what they need to do. However, when it comes to equity investment, investors are clueless.
The work is already in progress - many tech companies are creating AI-based systems to make equity
investment easy. In 2023, we will see more adoption around this, as AI systems have performed exceptionally well in recent years.
The AI-based system can create a personalised portfolio for investors based on their risk profile and investment horizon. They can help with portfolio optimisation through regular and timely rebalancing. Investors are unable to make the most of the equity market even after creating a good stock portfolio because they don’t know when to book profits or losses. AI systems are helping investors overcome the problem.
AI trading
Artificial intelligence in trading is expected to trend this year. AI stock trading uses robo-advisors which can analyse millions of data points for each stock and help you execute trades at the optimal price. Given that we use technology, traders can forecast markets with higher accuracy. These systems also help traders mitigate risks and provide higher returns.
Over the last few years, AI trading systems have grown significantly. In 2023, we will see more
traders using AI to trade on exchanges, as past results have shown that they get better results than the market average.
Risk management
Banks and financial institutions have been using AI for fraud detection for a long time. Retail investors will begin to use risk management for portfolio management using AI-based tools in the coming years.
AI-driven platforms can scan any number of portfolios 24*7 and send an alert to an investor who has a stock with a red flag. With this, investors’ lives become easier, as they don’t have to worry about tracking daily news, quarterly results and other updates about the company they have invested in. Anyway, most investors are unable to do it themselves, so these tools are a boon for them.
Conclusion
AI has already done wonders in the investing world. However, we are still in the nascent stage. With time, we will see much more transformation in the space. The above trends are here to stay and early adopters will surely benefit in their financial journey.
(The writer is the founder and chief executive of JARVIS Invest)