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Investing<\/a>\u00a0is a tricky subject, and if you find talk of index funds, equities, and compound interest rather confusing, then, this being the year 2025, you may well be tempted to turn to\u00a0Artificial Intelligence<\/a>\u00a0for help.<\/p>\n In fact, research from Fidelity International suggests that 25% of\u00a0Gen Z<\/a>\u00a0and\u00a0millennials\u00a0<\/a>are using AI to learn about investing.<\/p>\n It\u2019s easy to see why \u2013 nowadays, AI Large Language Models like\u00a0ChatGPT<\/a>\u00a0are being used for\u00a0all manner of tasks<\/a>, from sifting through data to\u00a0diet advice\u00a0<\/a>and\u00a0therapy<\/a>\u00a0to\u00a0video creation<\/a>.<\/p>\n However, ChatGPT may be getting up to one-in-three financial questions wrong.<\/p>\n That\u2019s according to broker analysis site Investing In The Web, which asked 100 personal finance questions such as \u2018How do I save for my child\u2019s education?\u2019 and \u2018What are the pros and cons of investing in gold?\u2019.<\/p>\n A panel of experts reviewed the responses and found\u00a065% were accurate<\/strong>. But 29% were incomplete or misleading, while 6% were flat-out wrong.<\/p>\n And it\u2019s not just ChatGPT.<\/p>\n Many Google searches show an\u00a0AI-generated<\/a>\u00a0\u2018overview\u2019 at the top of the results page. A study by financial services digital agency Indulge found a quarter of these summaries for common finance queries were inaccurate.<\/p>\n Ironically, Indulge used ChatGPT\u2019s latest model to fact-check each Google overview. Phase two of the study will involve human experts weighing in.<\/p>\n Paul Wood, the director overseeing this research, is not impressed. \u2018Anything less than 100 per cent accuracy is, in my view, a failure of the system,\u2019 he says.<\/p>\n So why is\u00a0generative AI<\/a>\u00a0often wide of the mark? It depends entirely on the prompts it is given and the data it is trained on, both of which can be flawed or outdated. It rarely shows its workings or sources.<\/p>\n And, to put it bluntly, ChatGPT is designed to sound polished and plausible.<\/p>\n Too often, it resembles a smooth-talking chancer trying to blag their way through a job interview. To be fair, humans don\u2019t have a spotless record here, either. The Financial Ombudsman received 1,459 complaints about financial advisers last year and upheld 57% of those relating to misselling or suitability of advice, which made up the most complaints. That\u2019s a tiny proportion of the hundreds of thousands it receives about the wider financial industry, but still.<\/p>\n Investing<\/a>\u00a0can be a confusing subject for anyone who hasn’t done it before. However, there are some\u00a0key principles<\/a>\u00a0you can keep in mind when embarking on\u00a0your investment journey<\/a>\u00a0that will help keep you on the right track and avoid potential pitfalls.<\/p>\n The first step any advisor will ask you to take before investing is to determine your risk tolerance (how comfortable you are with ups and downs) and risk capacity (how much loss you could realistically afford without derailing your plans).<\/p>\n Investments of any kind will fluctuate in value, rising and falling, and you should factor this into your financial planning.<\/p>\n Before investing, aim to keep 3\u20136 months of essential expenses in an easy-access savings account so you\u2019re not forced to sell investments in a downturn.<\/p>\n Your age<\/a>, financial situation, and even family set-up or dependents may have an influence on your attitude to risk.<\/p>\n If you are looking to trade individual\u00a0stocks<\/a>\u00a0and shares, using a reputable platform that is\u00a0FCA<\/a>-authorised is absolutely essential.<\/p>\n If an FCA-authorised firm fails and can\u2019t return your assets, the\u00a0FSCS<\/a>\u00a0may compensate up to \u00a385,000 per person, per firm for eligible claims – though this does not protect against normal market losses.<\/p>\n Platforms like\u00a0Trading212<\/a>\u00a0let you manage assets from your phone or computer without needing a traditional broker. It can also help you track market trends in real time and manage your investments conveniently in one place.<\/p>\n As a new investor, it may also be worth\u00a0considering diversified funds<\/a>\u00a0and ETFs.<\/p>\n If you’re completely new to investing, it’s absolutely essential that you take some time to learn about what you are about to do. Start with the basics – learn about shares, bonds, funds, gilts,\u00a0ISAs<\/a>, and more.<\/p>\n Always source your information from reputable sources\u2014for example,\u00a0MoneySavingExpert<\/a>\u00a0provides a great guide for first-time investors.<\/p>\n Remember, it may well be worth seeking professional advice about your investments from independent financial advisers (who advise on the whole market) or restricted advisers who only advise on a limited range of products or providers.<\/p>\n However, to ensure you receive regulated advice, you should only use individuals authorised by the Financial Conduct Authority (FCA).<\/p>\n This information is for general guidance only and does not constitute personal financial advice. If you\u2019re unsure, consider speaking to a qualified financial adviser<\/em><\/p>\n<\/div>\n<\/div>\n For most people, professional advice simply isn\u2019t accessible. According to a poll by asset-management giant Schroders, three-quarters of advisers won\u2019t take on clients with less than \u00a350,000 to invest. It\u2019s because advisers typically charge a percentage fee and smaller pots aren\u2019t worth their while.<\/p>\n Meanwhile, banks and pension providers can\u2019t offer straightforward guidance about your money because they\u2019re not regulated to give advice. So is it any wonder AI is stepping in?<\/p>\n The financial sector knows it has to catch up. The Financial Conduct Authority is changing the rules to allow more firms to offer \u2018targeted support\u2019, sometimes via AI. For example, it wants\u00a0pension funds<\/a>\u00a0to be able warn a customer if they are drawing down money from their nest egg too quickly and investors to be told if cheaper funds are available.<\/p>\n A senior figure at a major financial firm recently told me about a customer who held their\u00a0pension\u00a0<\/a>and bank account with it. When they tried to cash in their retirement pot, staff spotted regular\u00a0gambling\u00a0<\/a>activity on their statements. Instead of waving it through, the firm urged the customer to seek help.<\/p>\n Some financial advisers are automating admin tasks to cut costs and serve more clients, including those with less money. Octopus Money blends AI-generated suggestions \u2013 via a proprietary algorithm \u2013 with human money-coaches.<\/p>\n Other tools, such as specialised chatbots, can analyse your finances and tell you where you\u2019re going right \u2013 or wrong. Take Cleo \u2013 it offers two tones: \u2018hype mode\u2019 praises your good behaviour while \u2018roast mode\u2019 gives you a playful telling-off and might say \u2018here are the companies that are bleeding you dry\u2019.<\/p>\n Apparently, most of Cleo\u2019s seven million users prefer roast mode. Maybe we all know deep down that financial tough love can go a long way.<\/p>\n Which brings us back to ChatGPT, infamous for telling you your ideas are brilliant. To avoid its pitfalls, give it as much detail as possible in your prompt.<\/p>\n Always ask for sources and remember that its answers may not be current or relevant to the UK, along with checking\u00a0privacy\u00a0<\/a>settings if you\u2019re concerned about data being used to train future models.<\/p>\n Most importantly, don\u2019t treat its advice as gospel.<\/p>\n Specialist financial AI could be a game-changer. But right now? I\u2019m not sure I want the robot equivalent of Del Boy handling my investments \u2013 do you?<\/p>\nHow accurate is ChatGPT\u2019s investment advice?<\/h2>\n
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<\/p>\n\nHow to invest responsibly<\/h2>\n
\nUnderstand your risk tolerance<\/strong><\/h3>\n
Use a reputable FCA-authorised platform<\/h3>\n
Do your research<\/h3>\n
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