This piece explores the different ways artificial intelligence (AI) can streamline investing, outlining approaches that could suit readers who are both skeptical and curious about AI-aided investment processes. This article then spotlights Magnifi, an AI investing assistant, demonstrating how Magnifi consolidates a range of capabilities in an app and web-based platform while reducing drawbacks traditionally associated with AI investment tools. The guide ends with a series of practical examples of Magnifi optimizing an investment journey.
Artificial intelligence (AI) has been around for a while, but the furor around ChatGPT has pulled the broader trend into the limelight. No wonder: our current tools are only the tip of the iceberg, so with a future of even smarter tech ahead, investors have piled into AI-related stocks in a bid to cash in.
But that’s not the only way to benefit from this revolution. Instead of investing in AI, you can invest with AI.. Here’s how:
Robo-advisors: If you’re new to investing and prefer to have minimal involvement in your portfolio, robo-advisors can select, allocate, and rebalance your investments for you.
Quantitative trading models: For more advanced traders with shorter time horizons, these models offer algorithm-based trading strategies developed from statistical analysis of historical data.
Sentiment analysis: AI can analyze information to gauge public sentiment about specific stocks, sectors, or even the overall market. And while it doesn't tell you which stocks to buy, that extra information can deepen your understanding of market expectations, potential investment opportunities, and risks.
Risk-management system: Primarily focused on managing the downside risks in your portfolio, these AI systems estimate the likelihood and market impact of specific events before proposing ways to mitigate those risks.
Natural language processing (NLP) system: You’ll already know a couple of these: Bard and ChatGPT. You can treat them as investment research tools, though you’ll typically need to spend time prompting the research and may not have real-time data.
Whether you’re a novice or a seasoned investor, AI can help you reach your financial goals. If you’re just starting out, you can use it as a comprehensive and efficient research tool to overcome your time and knowledge limitations. And if you’re a more experienced investor, you could enhance your returns by identifying opportunities, tracking your performance, managing risks, and better diversifying your portfolio with AI tools.
But that doesn’t mean robots are taking over: you decide how much AI gets involved, and you can tailor everything around your personal style. So if you know your stuff and want to keep more control, you might prefer to use AI as a complementary tool rather than one that makes decisions for you.
Thing is, most retail investors don’t have access to these tools yet. And even the ones that are available rarely come in a centralized spot, existing instead as standalone products. But that’s where Magnifi comes in.
Magnifi is a web and app-based assistant, the first of its kind, that leverages proprietary AI, professional data sources from Morningstar to FRED, and ChatGPT to democratize investing intelligence in a personalized way. Essentially, think of it as your investment copilot. Magnifi can streamline your process at multiple points: idea generation, goal-based guidance, quick and quality research, and cross-account analyses of your portfolio across different brokerages.
If you want to invest, you broadly have three options today. Well-practiced investors can go it alone with an online brokerage account, and those who want a little more guidance can opt for robo-advisors or traditional financial advisors. But there are major drawbacks associated with each of these approaches: traditional advisors typically ask for a high minimum investment and running fees, robo-advisors rob you of control when investing, and online brokerages assume you have some basic level of investing expertise.
Magnifi, though, combines the benefits of those three approaches without introducing the traditional difficulties associated with them. Check it out:
Control: You’re getting a copilot, not a self-driving plane. Magnifi empowers you with personalized guidance, but you’re still fully in charge of how and what you invest in. So no matter your experience level, you can adapt how you use Magnifi to suit your financial goals and setup.
Accessibility: There’s no minimum investment with Magnifi, so you can invest as little or as much as you want. Costs are a lot lower than with traditional advisors too, and the monthly subscription model means you’re never locked in. Plus, Magnifi’s built-in brokerage means you can trade without paying any commission fees.
Support: Magnifi’s tools can consolidate and analyze your portfolio even if it's spread across different accounts, and they’ll identify areas of optimization too – something ordinary brokerages simply can’t do. You can also build strategies and find out more about markets via Magnifi’s 24/7 assistant. Basically, you’ll have a personal financial advisor in the palm of your hand.
Personalization: Magnifi offers personalized advice and support based on your risk appetite and investment goals. Better still, you can grant access to your portfolios and receive improvements based on your needs and preferences.
Let’s look at Magnifi in practice: here are a few ways the AI tool can aid your investment process.
Portfolio optimization and analysis
You’re able to consolidate your investment portfolios on Magnifi. That way, you can analyze your holdings across different accounts from Robinhood to Schwab as a collective. And when Magnifi gives you a conclusion or recommendation, you can always dig deeper by asking it to explain its reasoning, methodology, or data sources.
A major part of portfolio optimization is managing investment risks. Magnifi analyzes how diversified your portfolio is and suggests ways to improve it. The app can provide recommendations to improve your risk-return profile by identifying significant stock concentrations within your ETFs or stock positions. Plus, it can ensure you stay informed about important news and trends related to your investments.
Planning and idea generation
Magnifi doesn’t stop at identifying pockets of concentrated risks in your portfolio. The platform will then suggest alternative ETFs and stocks that can maintain your returns profile while minimizing risks.
If you’re new to investing, you can prompt Magnifi with a simple question like “How do I invest $1000?” or “Help me save for retirement” to get started. The bot will immediately suggest ways to create a diversified portfolio that lines up with your goals and risk appetite.
You can trust Magnifi to give you the latest news on market developments and trends, including rundowns of which sectors or stocks have outperformed and why. The app goes one step further, saving you countless hours of manual research by analyzing and summarizing extensive data sets from industry-leading financial partners like Morningstar, Factset, Fi360, and FRED. You can tap into all that know-how through its chatbot any time of the day.
If you’re interested in exploring more, Magnifi offers a free trial so you can experience AI investing for yourself. Be on the lookout for Magnifi’s high-yield savings account (offering you industry leading interest rates) and a whole host of other hidden gems.
This guide was produced by Finimize in partnership with Magnifi.
Check out Magnifi’s mini-website at finimize.com.
Disclaimer: Magnifi is an SEC Registered Investment Advisor
Diversification does not guarantee a profit or protect against a loss in a declining market. It is a method used to help manage investment risk.
Exchange Traded Funds (ETF’s) are sold by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the investment company, can be obtained from the Fund Company or your financial professional. Be sure to read the prospectus carefully before deciding whether to invest.