7 Ways to Use AI for Smart Investments for Millennials
Remember when investing meant spending hours squinting at stock charts, flipping through finance magazines, or chatting with a guy in a suit who had your life savings in a folder? Well, those days are over. Millennials are ditching traditional investing methods and starting to use AI.
Yes, AI isn't just for self-driving cars and voice-activated home assistants anymore. It’s also becoming the secret sauce for those who want to grow their wealth. With AI, you can tap into insights, automate your investment strategies, and make money moves while you sleep.
Understanding AI's Role in Smart Investments
AI is a game-changer for investors. It simplifies the complex, analyzes vast amounts of data, and offers insights that would take humans much longer to uncover. For millennials, who often juggle multiple responsibilities, AI provides a way to make informed investment decisions without spending hours on research.
AI-powered tools can analyze market trends, predict future performance, and identify investment opportunities that align with your financial goals. Whether you are interested in real estate, stocks, or other investment vehicles, AI can help you make strategic and informed choices.
Ways to Use AI for Smart Investment Approach
From stock market analysis to real estate investments, AI is becoming an indispensable tool for modern investors. Here’s how you can start using AI to transform your investment approach:
1. Use AI to Identify Stock Market Opportunities
The stock market can be intimidating, especially for new investors. However, AI-powered tools like robo-advisors and algorithmic trading platforms can analyze market data and make predictions about stock performance. These tools use historical data, real-time information, and complex algorithms to recommend when to buy or sell stocks.
Tool to Use: Betterment
Platforms like Betterment use AI to manage portfolios, automatically rebalancing them to optimize returns and minimize risk.
How it Works: This robo-advisor uses AI to manage your investment portfolio. It automatically rebalances your portfolio, optimizes for taxes, and adjusts based on your financial goals.
Who is it for? This platform is best for beginners or those who prefer a hands-off approach to investing.
2. AI-Powered Real Estate Investment
Real estate has long been a popular investment choice, but it traditionally required significant time and effort to research properties, assess market conditions, and manage investments.
AI is changing that. AI tools can analyze neighborhood trends, property values, and market demand to recommend the best investment opportunities. They can also predict market shifts, advising you on the best times to buy, hold, or sell properties. With AI doing the heavy lifting, real estate investment becomes a more passive and accessible way to grow wealth.
This appeal is reflected in a 2022 Bankrate survey, where one-third of millennials indicated they would prefer to invest in real estate for money they don’t need for at least 10 years, with the stock market as their second choice at about 23 percent.
Helpful Tool: Roofstock
AI-driven real estate platforms like Roofstock make it easier to identify profitable properties and invest in real estate without buying physical property.
What it does: It is an AI-driven real estate platform that helps you find and invest in rental properties. It analyzes market trends and property data to identify the best opportunities, making real estate investing easier and more accessible.
Who is it for? It’s best for Investors interested in real estate who don't want the hassle of hands-on property management.
3. Using AI for Personalized Financial Planning
Financial planning is crucial for building wealth, but it can be overwhelming to know where to start. By using AI to automate budgeting, savings, and investment planning, people can ensure they're on track to meet their financial goals without needing to consult a financial advisor regularly. This personalized approach makes financial planning more accessible and manageable for those who may not have extensive financial knowledge.
Tool for Financial Planning: Personal Capital
You can use financial planning tools like Personal Capital for personalized advice.
How it Works: It is an AI-powered tool that offers investment management and financial planning, providing personalized advice on budgeting, saving, and retirement.
Who is it for: This tool is best for those seeking an all-in-one solution to manage and optimize their entire financial life.
4. Optimize Your Retirement Savings with AI
Retirement may seem distant for many, but starting early is crucial for effective planning. According to a study, millennials have become more prepared for retirement, increasing their savings rate from 7.5% to 9.7% over the past two years. AI tools can further enhance this preparation by optimizing retirement savings by analyzing current financial status and predicting future needs.
These tools can adjust your savings strategy as your financial situation evolves, ensuring you stay on track to meet your retirement goals. By automating this process, AI simplifies building a robust retirement fund, making it easier to manage without constant monitoring.
Tool to Use: Wealthfront
Platforms like Wealthfront offer AI-driven retirement planning, which considers your income, expenses, and desired retirement lifestyle to recommend how much you should save.
Who is it for
This tool suits Investors looking for comprehensive financial planning combined with AI-driven portfolio management.
5. AI for Risk Management
Investing always comes with risks, but AI can help manage and mitigate those risks. AI tools can analyze market volatility, economic indicators, and individual investment performance to identify potential risks before they become significant. AI can predict market downturns and recommend portfolio adjustments to protect your investments.
Helpful Tool for Risk Management
Tools like Aladdin by BlackRock offer individual investors institutional-level risk management capabilities, offering insights and strategies to minimize losses during volatile times. Millennials can use AI for risk management to protect their investments and ensure steady growth.
Who is it for
It's suitable for Investors who want to manage risk like the pros and ensure their portfolios are resilient.
6. Real-Time Portfolio Monitoring and Adjustment
One of AI's advantages is its ability to monitor your investment portfolio in real-time and adjust as needed. This ensures that your investments are optimized for maximum returns, even during a busy schedule.
This is particularly relevant to millennials, who are more than twice as likely (73%) than Gen Z to switch providers, move assets between firms, or engage with new wealth managers.
AI Tool to Use: Charles Schwab Intelligent Portfolios
You can use Charles Schwab Intelligent Portfolios, a robo-advisor that uses AI to create and manage diversified portfolios. With no advisory fees, it automatically rebalances your investments based on your goals and risk tolerance.
Who is it for
This tool can be suitable for Investors looking for a low-cost, automated solution for diversified portfolio management with the backing of a trusted financial institution.
7. Invest in AI-Driven ETFs
Exchange-traded funds (ETFs) are a popular investment vehicle for those seeking a diversified approach. According to a recent study, approximately 45% of individual investors reported using ETFs, up from 40% in the fourth quarter of 2022, according to a survey by SSGA. Among these investors, millennials lead the trend, with 58% incorporating ETFs into their portfolios.
AI-driven ETFs enhance this investment strategy further by employing artificial intelligence to select and manage assets within the fund. These advanced ETFs analyze market data to identify trends and allocate assets dynamically, providing a more responsive and sophisticated investment approach.
AI Tool to Use: AIEQ
Investing in AI-driven ETFs allows millennials to benefit from AI's analytical power without actively managing individual stocks or assets. You can utilize the AI-Powered Equity ETF (AIEQ), which integrates AI to analyze vast amounts of market data and automatically select and manage its portfolio of stocks. The AI continuously adjusts the fund's holdings in real-time to capitalize on emerging trends and optimize returns.
Who is it for
It's a good fit for leveraging AI’s analytical capabilities for a dynamic and actively managed investment strategy.
8. AI for Cryptocurrency Investment
Cryptocurrency is becoming a popular investment choice, though it comes with notable volatility and risk. AI can help navigate these challenges by analyzing market trends, predicting price movements, and pinpointing the optimal times to buy or sell.
Notably, 21% of millennials (ages 27-42) are likely to own cryptocurrency, reflecting their growing interest in this dynamic market. By leveraging AI, these investors can better manage their crypto portfolios and enhance their chances of achieving favorable returns amidst the inherent market fluctuations.
Tool for Crypto Investment: Token Metrics
Platforms like Token Metrics use AI to evaluate the potential of different cryptocurrencies and recommend investment strategies based on your risk tolerance. By using AI to navigate cryptocurrency's complex and often unpredictable world, millennials can make more informed decisions and reduce the risks of this high-reward investment option.
Who is it for
This tool is a good option for crypto enthusiasts looking to make informed decisions in a highly volatile market.
Tips for Investors Using AI
Starting with AI-powered investments doesn't require a large upfront investment or deep financial knowledge. Here’s how to begin.
1. Choose the Right Platforms
Start by defining your goals and the type of assets you’re interested in. Evaluate the platform’s features and ensure they match your needs, considering risk tolerance and ease of use. Opt for platforms with strong security, good support, and a reputation for reliability. This will align your investments with your financial objectives.
2. Set Clear Financial Goals
Before going into AI-powered investments, set clear financial goals. Whether saving for retirement, buying a home, or building a diversified portfolio, having specific goals will help you choose the right AI tools and strategies.
3. Start Small and Learn
Begin with a small investment to get comfortable with AI-powered tools. Many platforms allow you to start with as little as $500. As you gain confidence and see how AI optimizes your investments, you can gradually increase your investment.
4. Monitor and Adjust
While AI handles much of the heavy lifting, staying engaged with your investments is essential. Regularly review your portfolio’s performance and adjust to align with your financial goals.
5. Keep Up with AI Trends
Stay informed about the latest developments in AI-driven investments. This will help you take advantage of new opportunities and features to enhance your wealth-building strategy further.
Final Thoughts
AI is changing how millennials approach investing, offering innovative solutions to manage and grow their wealth effectively. By integrating AI into various aspects of investment, from stock market analysis to real estate and cryptocurrency, investors can make more informed decisions.
With AI handling complex data and providing real-time insights, millennials can easily focus on their broader financial goals and make strategic adjustments. As technology advances, leveraging AI will remain a powerful tool for navigating the investment path and achieving financial success.
