How is AI more reliable at handling equity investments than traditional methods?

-Mr. Sumit Chanda, CEO and Founder of JARVIS Invest

Telugu super news, Hyderabad,March 2nd, 2023: We Indians have historically kept excess money in our houses until recently. The practice had many issues (safety & no returns), so we later moved to fixed deposits.

However, even fixed deposits are not the best investment options today because of high inflation. The thing is that when it comes to investments, investors need to continuously adapt to what new is on offer.

Over the years, investors have used traditional methods to manage their money – especially in equity. Today, they have the option of using technology like artificial intelligence to manage investments.
Investors must know what the technology offers, and then they can make informed decisions – whether to opt for it or not.

Traditional methods for money management..

Traditional fund managers have been managing investors’ money. Let us be honest, they have been doing a good job. However, if you are one of those investors who are happy with your fixed deposits, the chances are you will see no issues with them..

Traditional methods for investments are manual, which creates the most issues. For equity, with traditional methods, you work with a financial advisor who assesses your financial condition. Based on the assessment, they offer you a model portfolio.

Even if you are lucky enough to get an advisor, who creates a personalized portfolio, there is no significant support post-portfolio creation. Advisors work 60 hours per week, have N clients, and have over 100 stocks spread among them. There is no way they can track all the stocks and process every news around the company their clients are holding.

For asset-class gold and debt, traditional methods for money management work to a large extent. However, for asset classes like equity, you may do much better when you use technology like artificial intelligence.

How can AI help with investments more than traditional methods?
The first area where AI is far ahead of its traditional counterparts is personalization. An AI-based investment product can manage 10 – 100-or even 1000 clients. It can create a personalized portfolio for everyone.

Here is the best part -assume your friend started investing a month ago, and you have started now – you both have the same investment horizon and risk profile. In the traditional method, you both would have received the same advice. AI does not work that way-a lot changes in a month, and depending on the current macro and micro situations, the recommendation given by AI would be different for you.

Another advantage of AI is that it can monitor your investments 24*7 which is next to impossible with traditional methods. It can keep a close watch on all companies in your portfolio and alert you in the case of a red alert.

AI capability does not end here. One of the biggest reasons investors are moving to AI-driven advice is affordability. Traditional investment advisories are costly and not ideal for retail investors with small to midsized portfolios. AI can manage your investments at a cost much lower than professionally managed counterparts.

Reliable, but what about returns..?

All this is fine, but when it comes to investments, everything boils down to returns. Can AI beat traditional methods’ returns? The answer to the question depends on the effectiveness of the AI system you use. Advanced AI platforms can surely give you better returns, as they come with many advantages (discussed above). You cannot expect outperformance from a mediocre platform.

Final thought..
Change takes time, and most people are reluctant to adopt something new, but change is the only constant. Investors are already using AI and other technologies in critical areas like healthcare. The technology is advanced enough to be used in investments for superior returns compared to traditional methods.

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