{"id":13034,"date":"2025-04-05T21:05:50","date_gmt":"2025-04-05T21:05:50","guid":{"rendered":"https:\/\/finderica.com\/?p=13034"},"modified":"2025-04-05T21:05:50","modified_gmt":"2025-04-05T21:05:50","slug":"ai-powered-investing-is-a-newer-tool-is-it-right-for-you","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=13034","title":{"rendered":"AI-Powered Investing Is a Newer Tool \u2014 Is It Right For You?"},"content":{"rendered":"\n
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Artificial intelligence (AI) pops up in many places these days. You chat with it as customer support, it runs in the background to protect your accounts from fraud and medical professionals are using it to diagnose you. But, there also is AI-powered investing.<\/p>\n

An increasing number of brokerages are advertising AI-powered investing. It combines data analytics with the human expertise you get from an investment advisor. Some investment apps, like Magnifi<\/a>, offer it as well. But is it a reliable way to invest your money? We\u2019ll break it down for you.<\/p>\n

What Is AI-Powered Investing?<\/b><\/h2>\n

The line between human and artificial intelligence has blurred in recent years. Machines are able to spot patterns and make decisions based on input. Its pattern recognition has led to something called predictive analytics. It takes what it learned about the past to make decisions about the future.<\/p>\n

This type of AI is ready made for investment advice, but AI-powered investing is nothing new. Robo-advising made its debut years ago, taking the investment advisor out of the equation. But these days, AI-powered investing can work as a team with human advisors to gather data.<\/p>\n

\u201cAI digs through mountains of data at lightning speeds, spotting market trends, patterns and hidden risks, giving investors an advantage they haven\u2019t had before,\u201d said Brian Prince, founder and CEO of Top AI Tools<\/a>. \u201cBut let\u2019s not forget, AI is a tool at its core. It\u2019s here to empower retail traders with sharper decision-making and tailor investment strategies to fit their unique risk appetites, even offering up personalized trading advice.\u201d<\/p>\n

Robo-Advising vs. AI-Powered Investing<\/b><\/h2>\n

It\u2019s as easy as ever to invest on your own. With so many platforms available, you can start a trading account in no time. But unless you have a background in investing or hours to spend researching various stocks, these tools won\u2019t safeguard you from losing money.<\/p>\n

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One option that emerged recently is robo-advising. Robo-advisors use AI to help you reach your goals in a more automated way. So the biggest difference between a robo-advisor and AI-powered trading is that a robo-advisor typically doesn\u2019t have a human expert attached. You\u2019ll be relying solely on the algorithms to steer you in the right direction. AI-powered platforms are there to help the investor or advisor.<\/p>\n

\u201cFor someone who can\u2019t afford a financial advisor or has very simple needs and prefers a buy-and-hold strategy with a diverse portfolio, robo-advising can be a foot in the door to the world of retail investing,\u201d Prince said. \u201cPlatforms like Wealthfront<\/a> and Vanguard<\/a> provide robo-advisory services with low fees, and will even help with strategies like tax-loss harvesting.\u201d<\/p>\n

Some experts actually like the lack of human intervention. Eldad Tamir, founder and CEO of an AI-powered investment platform called FINQ<\/a>, believes AI helps eliminate the flaws that come with inserting a human investment expert in the process.<\/p>\n

\u201cOpting for financial advisory services that incorporate AI technologies presents a challenge as human intervention can only undermine the effectiveness of AI, chiefly by inserting human biases that often cloud judgment,\u201d Tamir said.<\/p>\n

4 Tips for Using AI-Powered Stock Trading<\/b><\/h2>\n

As AI-powered investing tools make their way into more brokerage firms, many of the old rules apply. Choosing a broker means looking at reputation and specialties. But a broker who uses cutting-edge tools brings benefits, too. Here are some things to keep in mind if you decide AI-driven trading is the right choice for you.<\/p>\n

1. Choose Brokers Wisely<\/strong><\/h3>\n

If you\u2019re handing your hard-earned money over to someone else to invest, choosing the right expert is essential. A broker who advertises AI-driven trading may seem appealing, but it\u2019s only one tool in an experienced broker\u2019s toolbelt.<\/p>\n

\u201cI don\u2019t think whether the financial advisor uses AI should rank very high on the list of criteria,\u201d said Dr. Shawn Daly, PhD, of Niagara University<\/a>. \u201cStick with the usual: trustworthiness\/integrity, communication skills\/listening, client-centric, detail oriented, etc.\u201d<\/p>\n

2. Keep an Open Mind<\/strong><\/h3>\n

Although artificial intelligence has been around awhile, it coming into the spotlight so quickly makes some people skeptical. AI-powered investing comes with risks, but it also comes with rewards.<\/p>\n

\u201cWhenever we\u2019re introducing AI into fields previously requiring human knowledge, insight and expertise, there will be hesitation,\u201d Prince said. \u201cAnd a dose of healthy caution is warranted. But it\u2019s also good to remember that AI can trade without emotional bias that can plague retail investors \u2014 especially new ones.\u201d<\/p>\n

3. But Know the Limitations<\/strong><\/h3>\n

As important as it is to keep an open mind, it\u2019s equally important to proceed with caution. Daniel Kroyter, founder of merchant account provider TailoredPay<\/a>, believes that for beginner investors, education is crucial. While AI-powered tools can help, an experienced financial advisor can take into account market shifts and other variables that impact investments.<\/p>\n

\u201cExercise caution not to leave it up to the machine when using AI tools, as they are not totally accurate, nor can they completely analyze every market aspect to predict perfect forecasts,\u201d Kroyter said.<\/p>\n

4. Understand the Tools<\/strong><\/h3>\n

As useful as artificial intelligence can be, humans are still behind the wheel. How useful the tool is still depends somewhat on the user. Bill Hortz, founder and dean at the Institute for Innovation Development<\/a>, said an investment advisor who uses AI shows they like to use the latest and greatest. However, AI prompting is an art, so it\u2019s important to make sure the advisor has the skills necessary to use the tools properly.<\/p>\n

\u201cIt goes back to what the manager\u2019s investment philosophy and approach is that directs, trains and prompts the technology to do and look for,\u201d Hortz said.<\/p>\n

AI-powered investing helps brokers, or the investors themselves, gather information quickly to help them make the right choices. In the right hands, it can remove human biases to help experts accurately predict the market. However, no piece of technology is perfect. It\u2019s important you put your money in the hands of someone who can use the information responsibly, whether that expert is you or a broker you hire to do the job.<\/p>\n

Stephanie Faris is a professional finance writer with more than a decade of experience. Her work has been featured on a variety of top finance sites, including Money Under 30, GoBankingRates, Retirable, Sapling and Sifter.<\/i><\/p>\n

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