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AI financial advice is surprisingly good, especially if you ask right questions

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Re: AI financial advice is surprisingly good, especially if you ask right questions

#21

Post by daf72 »

dmix wrote: post #5

I use YNAB ( https://www.ynab.com/ ) for budgeting so I already had all of my financial data in a single source. Exporting the CSVs locally and asking Claude to be my financial advisor legitimately gave me good advice. Not just nagging me to save more (which is always useful), but how to organize my budget categories better, detecting longer term spending patterns I wasn't thinking much about, researching credit card…

Nice idea! Do you mind sharing the prompt you used, interested in trying this out myself.

Re: AI financial advice is surprisingly good, especially if you ask right questions

#22

Post by santiagobasulto »

LLMs are aligned to be cautious. And “good” financial advice is extremely simple. A conservative approach gets you there 80% of the time. Is when people want to get too smart (or they’re bordes) that money is lost (gambling mostly: literally or with bad investments). So yeah, I’d assume AI is good at this.

Re: AI financial advice is surprisingly good, especially if you ask right questions

#23

Post by ctkhn »

tehlike wrote: post #20
jmyeet wrote: post #18

Financial advice for most people is incredibly straightforward and it can be summed up as: cut expenses and invest conservatively. Cutting expenses is the absolutely best thing you can do because it gives you more money to save AND reduces how much money you need to survive in retirement. Drive a 2007 Camry instead of buying a new F150 every 2 years. Live in a small as space as possible. Don't buy designer whatever.…

Cut expenses, and buy index funds.

The average index fund may not even be the best idea anymore - look at how most of the index providers except S&P caved on including an enormous but barely-tested IPO that has now dropped almost 20% since it launched barely 45 days ago.

Re: AI financial advice is surprisingly good, especially if you ask right questions

#24

Post by aprilthird2021 »

jamestimmins wrote: post #19

AI seems to struggle most when it has to make decisions with lots of trade-offs, especially where the context or implications of various decisions are nested, which is presumably why it struggles to write full software systems that are well-designed. By comparison, financial advice is pretty simple, and there is a universally agreed-upon approach that most people should follow to maximize long-term financial health.

> By comparison, financial advice is pretty simple, and there is a universally agreed-upon approach that most people should follow to maximize long-term financial health.

What will AI do when those rules, which it's trained on their repetition so much, don't apply anymore? ~8% annual stock gains for the next 40 years may not hold and an 80/20 stock/bond ratio may not be as wise in upcoming decades

Re: AI financial advice is surprisingly good, especially if you ask right questions

#25

Post by networkOne »

Yes, financial planners will be one of the first industries to totally revamp itself because of AI. $2,000 for some SoA which is 99% boiler-plate? No thanks.

I spent years in this industry, and the advice from these 'experts' is demonstrably poor.

Re: AI financial advice is surprisingly good, especially if you ask right questions

#26

Post by toomuchtodo »

aprilthird2021 wrote: post #24
jamestimmins wrote: post #19

AI seems to struggle most when it has to make decisions with lots of trade-offs, especially where the context or implications of various decisions are nested, which is presumably why it struggles to write full software systems that are well-designed. By comparison, financial advice is pretty simple, and there is a universally agreed-upon approach that most people should follow to maximize long-term financial health.

> By comparison, financial advice is pretty simple, and there is a universally agreed-upon approach that most people should follow to maximize long-term financial health. What will AI do when those rules, which it's trained on their repetition so much, don't apply anymore? ~8% annual stock gains for the next 40 years may not hold and an 80/20 stock/bond ratio may not be as wise in upcoming decades

Models can be updated when foundations domain knowledge graphs are built on change. As of this comment, target date funds and pensions containing trillions of dollars adhere to the assumptions you mention (asset class allocation, growth rate and return assumptions, safe withdrawal rates ["Trinity study" aka ~4%/year], etc), and so consumers of AI provided guidance assuming these foundations could do much worse (as they already do today due to lack of information, knowledge, will, etc).

You literally just need to stick the Bogleheads forum into your AI assistant of choice for most folks, if they'll listen (which is the hardest part, imho, people want to gamble, not invest, in my experience). Prompt "What is your age?" respond "Optimal target date fund is 20XX fund based on your current age and retirement age, please confirm to set to default for investing." I suppose this will eventually make its way in some form into every banking, fintech, and brokerage mobile app chatbot in some capacity.

https://www.bogleheads.org/wiki/Getting_started

https://en.wikipedia.org/wiki/The_Index_Card

If you want to get fancy, crib off of California's now mandatory high school financial literacy curriculum for grounding.

https://www.cde.ca.gov/ci/cr/cf/personalfinance.asp

https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml...

("computah, teach me how to personal finance and invest")

Re: AI financial advice is surprisingly good, especially if you ask right questions

#28

Post by Terr_ »

dmix wrote: post #5

I use YNAB ( https://www.ynab.com/ ) for budgeting so I already had all of my financial data in a single source. Exporting the CSVs locally and asking Claude to be my financial advisor legitimately gave me good advice. Not just nagging me to save more (which is always useful), but how to organize my budget categories better, detecting longer term spending patterns I wasn't thinking much about, researching credit card…

>YNAB

I've fallen behind on keeping it up-to-date, but I feel I ought to plug anything self-hostable: https://actualbudget.org/

Re: AI financial advice is surprisingly good, especially if you ask right questions

#29

Post by mjr00 »

AI financial advice is surprisingly good... for now. But given the historical trajectory of both the finance and advertising sectors I can't imagine it will, for long. AI responses without ads are unoptimized space!

It only takes Draftkings writing a very large check to Google before it responds to financial questions with solid advice before ending with, "Since you have a few spare hundred dollars laying around, why not try a high-risk investment into same-game parlays?"

Re: AI financial advice is surprisingly good, especially if you ask right questions

#30

Post by drivebyhooting »

tehlike wrote: post #17
joshuamorton wrote: post #12

Earlier quoted context omitted.

> It will tell you something like TQQQ is not a good long term hold, when it can be perfectly fine especially if you mix in with 60-20-20 with TQQQ-GDE-ZROZ, and DCA and annually rebalance. As someone who long-term-holds TQQQ (I am lazy) it is pretty much true that holding TQQQ doesn't make sense. It is basically unambiguously better (ie. the risk-adjusted returns are higher) to directly hold options that construct t…

> I am lazy > directly hold options that construct the same amount of leverage A lazy guy on hackernews, with knowledge on TQQQ, options. You are making my case. Holding TQQQ vs doing with options are different in many ways. You will get a tax drag that you need to be mindful of. You are also not saying something that goes against what I said. The reason LLM says TQQQ is not a good long term hold is because it can go…

Look up “nonconvexity”. TQQQ during draw down will kill your gains.
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