How Can Artificial Intelligence Improve Your Investment Decision Making?

Artificial intelligence is one of the most revolutionizing technologies. It has been in development for the last decade and is finally here. Almost everything uses AI to generate the most accurate results in this digital age. This includes AI in Google's traffic data to sort your emails, Facebook to have a face recognition feature, and social media platforms to alter your product recommendations. Just like all the other aspects of our lives, AI is also revolutionizing the finance industry and how investments are being made across the globe. 

AI started contributing to the finance industry by enabling mobile check deposits, helping top investors make the right investment decisions today. It is being employed by various financial institutions today to help their clients invest smarter. Here is how Artificial Intelligence can improve your decision-making as an investor too:

1. Better Forecasts

AI and machine learning have enabled investors and expert asset managers to integrate new information more quickly and easily into their investment portfolios. With increased computing power, volumes of data regarding the potential investors can be used, and statistical models of AI can help predict more accurate results in terms of the outcome of each investment. This enables investors to improve the allocation of their assets into the most profitable opportunities and mitigate the overall risk associated with investments.

2. Decreased Emotional Biases

Emotional biases can disturb investors' ability to make the right decisions. In fact, behavioral finance has concluded numerous times that investors are usually not the most rational when making investment decisions. This includes retail investors, institutional investors, and individuals looking for investment options without prior experience. They are all susceptible to biases, which can easily cloud their judgment. One of the best examples of this is the University of Chicago's sale of equity in 2008, which resulted from aversion bias. AI tools help reduce and eliminate such irrational human tendencies by ensuring that all results are based on data. AI results in evidence-based decision-making, which can improve the chances of successful investment. 

3. Improved Communication

Artificial Intelligence has led financial services firms to be able to cater to calls around the cloud. AI is used in the customer service department of major financial providers. Chatbots are serving in almost all industries today and are used as the first line of support for clients who have queries in the financial sector. The capability of chatbots is still limited to answering the most common questions, but that means fewer questions for the human desk. This can help you, and your team optimize your working hours around more important aspects of investment decision-making and worry less about getting back to clients in time. 

AI is helping investors cut down on the cost of hiring people in the customer service department. It has streamlined communication for the financial service and financial sector. Most customers have even changed their preference for digital communication due to its accessibility and quick response time. AI chatbots can be available 24/7 on your investment services website and can answer most clients' queries regarding the finance market.  

4. More Chances to Achieve Success

According to a recent report published by Accenture, which gathered the response from wealth managers across the U.S, 80% of managers have predicted that AI can revolutionize the whole financial industry within five years. AI helps manage investment portfolios for the managers and ensures rational and data-driven decision-making. This increases the chances of profitability of the investments in the long run. Financial advisors can focus solely on client relationships and growing your client base instead of worrying about managing the portfolio. AI can lift off workload from an investor.

Artificial Intelligence can help you mitigate the risk, as emotions are eliminated from decision-making. This leads to well-calculated decisions and ensures no beliefs or convictions of yours get in the way of preserving accuracy in decision-making. AI can extract relevant data from unorganized data, which is impossible through the manual calculations of the investor or their team. AI will track patterns of profitable and unprofitable investments and derive a conclusion that predicts the performance of a particular investment. This will ensure the results are derived from the closest figures and maintain your credibility for your clients.

5. Optimized Portfolios 

An investment portfolio requires attention to detail and intense calculations. Before AI  was developed and adopted by the finance industry, human effort was needed to optimize a portfolio. This meant that investors had to use their working hours, as the task can be pretty time-consuming. With AI integration in digitalization, portfolio shifts can be easily indicated with the available data. AI uses algorithmic programs to enable these indicators to make changes in the investment portfolio automatically. This ensures that the investment portfolio quickly adjusts to market trends, leading to optimized client outcomes. This can prove your credibility and reputation as an investor and improves your success rate. 

Endnote 

Investments in gold IRAs, stocks, cryptocurrencies, real estate, and other assets will always be an integral part of finances for every individual and every business. However, investment decisions do not have to be based only on individual decision-making. Artificial intelligence can help optimize the decision-making associated with investments and improve the profitability of your investment portfolio.