5 ms·

> By comparison, financial advice is pretty simple, and there is a universally agreed-upon approach that most people should follow to maximize long-term financi

by aprilthird2021 2mo ago

> 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

toomuchtodo 2mo ago
Models can be updated when foundations domain knowledge graphs are built on change. As of this comment, target date funds and pensions containing trillions of dollars adhere to the assumptions you mention (asset class allocation, growth rate and return assumptions, safe withdrawal rates ["Trinity study" aka ~4%/year], etc), and so consumers of AI provided guidance assuming these foundations could do much worse (as they already do today due to lack of information, knowledge, will, etc). You literally just need to stick the Bogleheads forum into your AI assistant of choice for most folks, if they'll listen (which is the hardest part, imho, people want to gamble, not invest, in my experience). Prompt "What is your age?" respond "Optimal target date fund is 20XX fund based on your current age and retirement age, please confirm to set to default for investing." I suppose this will eventually make its way in some form into every banking, fintech, and brokerage mobile app chatbot in some capacity. https://www.bogleheads.org/wiki/Getting_started https://www.bogleheads.org/wiki/Getting_started https://en.wikipedia.org/wiki/The_Index_Card https://en.wikipedia.org/wiki/The_Index_Card If you want to get fancy, crib off of California's now mandatory high school financial literacy curriculum for grounding. https://www.cde.ca.gov/ci/cr/cf/personalfinance.asp https://www.cde.ca.gov/ci/cr/cf/personalfinance.asp https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240AB2927 https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml... ("computah, teach me how to personal finance and invest")
- foxtrot8672 2mo ago
  Context mangement is necessary to fully realize the power of AI financial advice. Memories, financial history, and decisions need to made with the AI. This translates into the epistemic record of every answer and its how we do it. This allows us to precisely repeat AI experiments with a given set of inputs and is necessary to ensure a high quality output. The paper talked about how an AI informed the usr to build a financial emergency fund. but, when the user lost their job, the AI completely forget it existed. This proves our theory that context management is the key to unlocking the full potential of AI financial advice.
mjr00 2mo ago
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 repeatable build process." All very true, but also so general and basic that it's not helpful.
- grg0 2mo ago
  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.
  - bdangubic 2mo ago
    AI is right on the money here (pun intended)
  - anigbrowl 2mo ago
    I don't know why you're being downvoted here. A huge amount of 'financial advice' boils down to 'stop being poor,' which is to say it's about what to do with your economic surplus rather than what to do if you don't have one and aren't long on avocado toast.
    - sheepolog 2mo ago
      I didn't downvote them, but I am genuinely curious to hear from people who "can't save money", and try to understand why that's the case. My assumption is that a large percent of them are spending way more than they need to, but that could easily be an incorrect stereotype.
      - singpolyma3 2mo ago
        It's actually almost certainly true just on the basis of basic numbers. Many people who are really actually quite poor (making say under $35k CAD annually for a family of 5) manage to make ends meet and even save a little. So if you make more than this but can't save any it's because you're spending on things they are not and which are therefore nonessential. Now maybe restaurant food, name brand groceries, driving two SUVs, vacations, etc etc whatever it is for a given person are seen as essential. That's how lifestyle works after all and we often can't imagine our lives without it. So I'm not saying it's a "simple" matter of just spend less because it's often not very simple feeling. But from a numbers PoV it is possible for most people who otherwise see themselves as struggling in theory.
gloryjulio 2mo ago
Investing and trading is a dynamic game. If everyone has the edge of certain portfolio to out perform the average, then no one has the edge. Similarly AI is not going to solve that. Because everyone would end up with similar AI edge until no one has the edge. People should start with simple universal rules: Stay invested. Buy low cost diversified etf fund. Favor long term investment instead of trading. Learn something from all weather portfolio composition to hedge the risks.
- inigyou 2mo ago
  When everyone is crowding into one investment that investment tends to get irrationally over-saturated. With the current makeup of the S&P500 we can predict it will dramatically crash in real value in the next five years.
  - kasey_junk 2mo ago
    That’s why the classic investment advice is to hedge your exposure to the equities markets, do more so the closer you get to retirement and don’t put money you need in the next 7 years in equities. The bigger concern with the classic advice is that bonds have become more correlated with equities and our backtesting was all done during a time period where the American liberal international economic system was dominant so we aren’t sure that it will hold up to the new partitioned order.
  - gloryjulio 2mo ago
    [dead]
epolanski 2mo ago
Sound financial advice is not "go all in on SP500". Albeit that's more sensible than what the overwhelming majority of retail investors do. Sound financial advice takes into account the financial situation, time spans, goals, risk adversity, etc.

toomuchtodo 2mo ago

Models can be updated when foundations domain knowledge graphs are built on change. As of this comment, target date funds and pensions containing trillions of dollars adhere to the assumptions you mention (asset class allocation, growth rate and return assumptions, safe withdrawal rates ["Trinity study" aka ~4%/year], etc), and so consumers of AI provided guidance assuming these foundations could do much worse (as they already do today due to lack of information, knowledge, will, etc). You literally just need to stick the Bogleheads forum into your AI assistant of choice for most folks, if they'll listen (which is the hardest part, imho, people want to gamble, not invest, in my experience). Prompt "What is your age?" respond "Optimal target date fund is 20XX fund based on your current age and retirement age, please confirm to set to default for investing." I suppose this will eventually make its way in some form into every banking, fintech, and brokerage mobile app chatbot in some capacity. https://www.bogleheads.org/wiki/Getting_started https://www.bogleheads.org/wiki/Getting_started https://en.wikipedia.org/wiki/The_Index_Card https://en.wikipedia.org/wiki/The_Index_Card If you want to get fancy, crib off of California's now mandatory high school financial literacy curriculum for grounding. https://www.cde.ca.gov/ci/cr/cf/personalfinance.asp https://www.cde.ca.gov/ci/cr/cf/personalfinance.asp https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240AB2927 https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml... ("computah, teach me how to personal finance and invest")

foxtrot8672 2mo ago
Context mangement is necessary to fully realize the power of AI financial advice. Memories, financial history, and decisions need to made with the AI. This translates into the epistemic record of every answer and its how we do it. This allows us to precisely repeat AI experiments with a given set of inputs and is necessary to ensure a high quality output. The paper talked about how an AI informed the usr to build a financial emergency fund. but, when the user lost their job, the AI completely forget it existed. This proves our theory that context management is the key to unlocking the full potential of AI financial advice.

mjr00 2mo ago

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 repeatable build process." All very true, but also so general and basic that it's not helpful.

grg0 2mo ago
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.
- bdangubic 2mo ago
  AI is right on the money here (pun intended)
- anigbrowl 2mo ago
  I don't know why you're being downvoted here. A huge amount of 'financial advice' boils down to 'stop being poor,' which is to say it's about what to do with your economic surplus rather than what to do if you don't have one and aren't long on avocado toast.
  - sheepolog 2mo ago
    I didn't downvote them, but I am genuinely curious to hear from people who "can't save money", and try to understand why that's the case. My assumption is that a large percent of them are spending way more than they need to, but that could easily be an incorrect stereotype.
    - singpolyma3 2mo ago
      It's actually almost certainly true just on the basis of basic numbers. Many people who are really actually quite poor (making say under $35k CAD annually for a family of 5) manage to make ends meet and even save a little. So if you make more than this but can't save any it's because you're spending on things they are not and which are therefore nonessential. Now maybe restaurant food, name brand groceries, driving two SUVs, vacations, etc etc whatever it is for a given person are seen as essential. That's how lifestyle works after all and we often can't imagine our lives without it. So I'm not saying it's a "simple" matter of just spend less because it's often not very simple feeling. But from a numbers PoV it is possible for most people who otherwise see themselves as struggling in theory.

gloryjulio 2mo ago

Investing and trading is a dynamic game. If everyone has the edge of certain portfolio to out perform the average, then no one has the edge. Similarly AI is not going to solve that. Because everyone would end up with similar AI edge until no one has the edge. People should start with simple universal rules: Stay invested. Buy low cost diversified etf fund. Favor long term investment instead of trading. Learn something from all weather portfolio composition to hedge the risks.

inigyou 2mo ago
When everyone is crowding into one investment that investment tends to get irrationally over-saturated. With the current makeup of the S&P500 we can predict it will dramatically crash in real value in the next five years.
- kasey_junk 2mo ago
  That’s why the classic investment advice is to hedge your exposure to the equities markets, do more so the closer you get to retirement and don’t put money you need in the next 7 years in equities. The bigger concern with the classic advice is that bonds have become more correlated with equities and our backtesting was all done during a time period where the American liberal international economic system was dominant so we aren’t sure that it will hold up to the new partitioned order.
- gloryjulio 2mo ago
  [dead]

epolanski 2mo ago

Sound financial advice is not "go all in on SP500". Albeit that's more sensible than what the overwhelming majority of retail investors do. Sound financial advice takes into account the financial situation, time spans, goals, risk adversity, etc.