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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.
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If you’re a layman investor just dump all of your shit in index funds. Even if you’re smart and sophisticated, you’re still competing against the massive amount of fraudulent insider trading happening right now with zero enforcement and are trading at a disadvantage as a result
Not to mention huge quant firms that paid more than 4x your salary just to get a trading latency advantage
So basically if you’re larping as a trader you will consistently get your ass handed to you unless you are genuinely better than all the pros, but if you’re investing or optimizing for a specific risk profile/exposure/timeline you’re playing a different game.
Anyway the fact that it’s so hard to explain this stuff to individuals does strengthen the argument that most individuals are better off following the herd.
Isn't this the point of LLMs? If not it would be deterministic and that's not "new" and/or "exciting".
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> 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
Stock/bond ratios are way too advanced for what's qualifying as good advice here: > AI consistently advised people to save during their working years, draw down savings in retirement, invest heavily in diversified stock funds, and reduce stock exposure after age 45. This is analogous to saying to an aspiring software developer, "You should write clean and testable code, have clearly defined API boundaries, and a repe…
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.
FWIW, bonds are no longer a hedge against equity unless they’re based against private equity and private equity is both more expensive and more performant than ever.
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Stock/bond ratios are way too advanced for what's qualifying as good advice here: > AI consistently advised people to save during their working years, draw down savings in retirement, invest heavily in diversified stock funds, and reduce stock exposure after age 45. This is analogous to saying to an aspiring software developer, "You should write clean and testable code, have clearly defined API boundaries, and a repe…
Right, that's the 'what', but not the 'how'. > Prompt: but I don't have enough money to save, I can barely make ends meet. > AI: I see the problem now---If you don't have enough money to save, and reducing your expenses is not an option, then the answer is clear: make more money.
If I had zero financial knowledge, I would trust some of the big models with setting up a sound investment and savings strategy.
The hard part is behavioural/emotional/psychological rather than technical. Usually discussions about money are never actually about money, but rather safety, fear, etc. That’s where a real advisor earns their keep. Understanding the client and instilling confidence/comfort.
It's easy to make a good call, but it's really hard to stick with it.
The main financial advice I'm giving to all relatives is to write down their decisions before buying anything. Or, if you're looking for a long term investment - asking someone close to change the password on your account without letting you know.
The major problem with investing is that most people will commit to 2-5y strategy, and panic on the first dip.
If you did your due diligence and you believe that this particular asset will grow within 5 years - when it starts dipping after few months, and nothing major has changed in your predictions - you should buy more instead of selling.
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.
Financial advice is universally agreed upon, to the same extent that advice about software engineering is also universally agreed upon, you know, like write unit tests, write maintainable code, etc. But the devil is in the details.