Artificial intelligence (AI) is reshaping the world of personal investing. No longer a tool reserved for the big end of town, AI in Investing can lend its analytical capabilities to consumers where the AI algorithms are asked to sift through vast datasets, offer insights and predictions, and provide automated strategies.
Consumers are beginning to harness AI as both a decision-making tool and an educational ally in their investment journey. Individuals are leaning on AI-driven platforms to explain complex financial concepts, analyse market trends, and even simulate investment scenarios. Whether through AI-curated learning paths, interactive chatbots that break down investment jargon, or predictive models that showcase potential outcomes, modern investors are using technology to improve their financial literacy.
Despite AI’s appeal in streamlining investment strategies, it’s not without its challenges. Relying solely on AI can sometimes lead to a false sense of security; algorithms are built on past data to make predictions, meaning unprecedented events or “black swans” can throw its models off. Additionally, if there’s bias in the input data, the AI system can perpetuate or even exacerbate those biases, leading to skewed investment advice. There’s also the risk of data privacy breaches, where personal financial information could be exposed if you use public or 3rd party AI tools. Not to mention, AI lacks the human touch—a nuanced understanding of socio-economic contexts, or it might not account for sudden world events, corporate scandals, or political contexts, leading to inaccurate forecasts.
As consumers integrate AI tools into their investment approaches, it’s imperative to strike a balance, pairing technological insights with human intuition and staying informed about the potential pitfalls in this rapidly evolving landscape.
AI for the Stock Market
AI is changing trading patterns in the stock market. For instance, algorithmic trading, where AI analyses historical data to make timely buy or sell decisions. Investors are using these ‘robo-advisors’ to offer automated portfolio management and take the guesswork out of financial planning. Stock market investors are also using predictive analysis, where AI forecasts potential stock movements by churning through mountains of data. While these AI-backed methods have many benefits, like efficiency and data-driven decision-making, they’re not without risks. AI’s reliance on past data means it might miss the mark during unforeseen market upheavals, and the absence of human intuition and ability to understand context could imply overlooked nuances.
AI for Cryptocurrency Trading
As digital coins and tokens continue to capture investor attention, AI-powered crypto wallets are emerging as asset management tools, offering enhanced usability and security recommendations. The use of trading bots, equipped with machine learning models, can handle the 24/7 cadence of the crypto world, executing trades based on a set of predefined rules. Beyond trading, AI-driven predictive analysis is trying to predict the volatility of crypto markets, forecasting potential price shifts. And with the surge in crypto’s popularity, the risk of foul play rises. Enter AI’s role in fraud detection, spotting unusual patterns and keeping dubious activities at bay. However, while the benefits are exciting, there are inherent risks. AI models can misjudge crypto’s unpredictable swings, and an over-reliance on automated systems could mean sidestepping the human intuition that often proves invaluable.
AI for Real Estate
At the heart of property investing lies the crucial question of value, so investors can use AI to estimate property values by diving deep into historical data and market trends. Property AI tools can be used to sift through vast amounts of data to spotlight potentially lucrative investment opportunities and provide more personalised property recommendations. However, while the benefits of AI in real estate are clear – from informed decisions to convenience – there are pitfalls to watch out for. AI’s valuations, for instance, are based on past data and might not always understand nuances or rapidly changing local factors affecting property values.
AI for Collectibles and Art
A prominent application is price prediction; AI dives deep into historical pricing data, forecasting the potential future value of coveted pieces, whether a vintage comic book or a contemporary sculpture. Take, for instance, an ancient artifact whose past auction prices can be analysed to gauge its future market trajectory. Beyond pricing, authenticity is the cornerstone of the art and collectibles realm. AI tools play a pivotal role here, meticulously scrutinising artworks to verify their genuineness, ensuring that that priceless painting is not a clever forgery. Furthermore, determining the exact value of an artwork or a collectible item is now more science than guesswork, with AI-driven valuation tools offering insights grounded in data and patterns. However, while the allure of AI in this sector is strong, it’s not without its challenges. Art, with its subjective nature, means that AI’s data-centric approach might sometimes overlook the intangible sentiments or historical contexts that drive human appreciation and valuation. As with many sectors touched by AI, while the technology is a boon, a discerning human touch remains indispensable in the world of art and collectibles. To find out more about investing in collectibles, read our article getting into collectibles.
AI for Savings and Retirement Planning
Consumers are looking at AI’s capabilities to help with their financial strategies when it comes to savings and retirement planning. Through AI-powered platforms, individuals can gain a comprehensive view of their financial health, enabling them to consider savings strategies tailored to their unique situations. For example, a person could use an AI-driven platform to balance daily expenses, savings, and investments for a long-term vision. When planning for retirement, specific robo-advisors have emerged to focus solely on managing and optimising retirement accounts. These platforms harness AI to ensure consumers are on the best possible path to a comfortable retirement, adjusting investment strategies based on market conditions and individual retirement goals. The benefits are compelling, with AI offering efficiency, personalisation, and data-driven decision-making. However, as with any automated system, while AI simplifies and offers informed perspectives, the nuances of personal financial preferences and risk appetites mean human judgment remains a valuable companion in the journey toward financial security.
As personal investing evolves, we will begin to see AI tools and uses become increasingly prominent. This technology introduces various tools and platforms designed to aid the investment process. It’s essential, though, to approach these innovations with a balanced perspective. On one hand, AI offers insights that can be instrumental in decision-making; on the other, independent research and occasional human expertise remain vital to cross-checking and validating these insights. Data privacy is another key consideration; understanding how platforms manage and safeguard your information is essential. Ultimately, the integration of AI in the investment domain has the potential to make the process more approachable and user-friendly. Still, its impact will largely depend on how individuals choose to use it.
Super can be much harder to quantify if you are a member of MSBS or DFRDB, known as defined benefit schemes. This is because the bulk of your super benefit will likely be in the form of a lifetime indexed pension, based on your years of service and final average salary. The longer you stay in Defence, the larger your lifetime pension. This cannot easily be compared to a standard accumulation super fund. Please contact the Commonwealth Superannuation Corporation (CSC) for an estimate or your current benefit.
If you have an accumulation super fund, like ADF Super, it’s much easier to compare the superannuation you get from Defence with that of a civilian employer. Generally employers pay super at a rate of 9.5% of your ordinary salary and allowances, Defence pays super to accumulation fund members at a rate of 16.4%, well above the minimum requirement.
You may not appreciate the value of your generous superannuation benefits now, but you certainly will in years to come.
ADF members receive, statutory death and invalidity cover, and rehabilitation services if needed. To replace this cover in civilian employment, you may need to take out personal insurance, such as death, disability, trauma and income protection. The cost would depend on your age and personal circumstances but could cost thousands of dollars a year.
The ADF offers free education and training and/or study assistance schemes. If you’ve been receiving tertiary education at no cost or received any form of study assistance, consider what it might cost to continue your education outside Defence.
Take some time to think about these and any other benefits provided to you by Defence to get a better understanding of the real value of your employment package.
As an ADF member you will usually receive subsidised housing or rental assistance if you are not living in your own home. If you buy a home to live in you may be eligible for a range of other assistance schemes.
If you are receiving rental assistance you can calculate the value by multiplying the fortnightly assistance amount by 26 to get an approximate annual benefit.
If you’re in service housing you can estimate your benefit by deducting the rent contribution taken out of your pay, from the amount of rent you would pay each fortnight for a similar property in the same area. Multiply the result by 26 to estimate your annual benefit.
Housing assistance schemes for members buying a property include the Defence Home Ownership Assistance Scheme (DHOAS), Home purchase assistance scheme (HPAS) and Home purchase or sale expenses allowance (HPSEA)
Serving ADF members receive a range of healthcare benefits, including free medical and dental treatments, rehabilitation services, psychological support and access to fitness facilities like gyms, pools and sporting fields.
To put a value on these benefits, think about what you might be paying for if you were not an ADF member. For example, what would it cost you for private health insurance, prescriptions, physiotherapist, dentist, specialist visits, gym membership or other fitness related costs?
Medicare covers the costs of being admitted to hospital as a public patient, some of the fees charged by GPs and other medical professionals, and subsidised prescription costs for medicines listed on the Pharmaceutical Benefits Scheme (PBS). ADF members don’t pay the Medicare levy, currently 2% of taxable income.
Private health insurance covers some or all of the cost of a range of services not covered by Medicare, for example, a private hospital and the doctor of your choice, as well as ancillary services such as dental, optical and physiotherapy, not covered by Medicare.
Your pay consists of a base salary, with the addition of employment-related allowances. Your base salary can be found at the top of your payslip on the right, listed as ‘Annual salary’. If you need help reading your payslip, see the ADF guide on Pay and Allowances.
Note: From 13 May 2021, service, trainee, reserve and uniform allowances will be rolled into a single ‘Military salary’.
The earnings section of your payslip lists any allowances you receive. The amount in the ‘Current’ column is the amount you get every fortnight for each allowance. You can add allowances by typing in the name of the allowance in the ‘Add allowance’ box and clicking the + symbol.
A deployment provides some ADF members with additional allowances that are not part of regular pay. We have not included these allowances in the calculation of your remuneration package, however, you may want to take the additional deployment allowances into account if you are comparing your ADF remuneration with civilian employment.
Medium-term goals are those that you want to achieve in 3-6 years. This could include saving for a home deposit, paying off your car or paying down all your loan debts. Having a budget and your goals written down.
Long-term goals are plans you want to achieve in around 7 years or more. This could include buying a home or paying off your mortgage, paying for your children’s education or saving for retirement.
For long-term goals think about investing some of your money. Get some financial advice to work out a good investment strategy to reach your goals.
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MSBS is a hybrid defined benefit and accumulation super scheme which closed to new members on 30 June 2016. If you are an MSBS member, your benefit will consist of a lifetime indexed pension (employer component) based on your final average salary and years of service. Some or all of this benefit can be taken as a lump sum when you have met a condition of release (the defined benefit). The scheme also has a member component made up of your compulsory and voluntary personal contributions, ancillary contributions and investment returns, that you will also receive as a lump sum when you have met a condition of release (the accumulation benefit).
The pension component can be taken from age 55. If you are retiring or resigning from the ADF after reaching age 55 or are entitled to a Class A or Class B invalidity pension, you will be eligible for a pension when you leave the Service. For all other members, your employer benefit will freeze and be preserved, increasing with CPI each year, until you are eligible to receive it.
The member component of your benefit may be left in MSBS, where it will increase with investment returns each year until you access it, or it can be rolled over to another complying super fund.
For more information contact the Commonwealth Superannuation Corporation (CSC).
If you joined the ADF for the first time after 30 June 2016, you will fall under the ADF superannuation arrangement, and will be a member of an accumulation fund, such as ADF Super. If you had previously served, and are a member of MSBS, you will be re-entered into MSBS on rejoining the Service.
For accumulation fund (eg. ADF Super) members, your benefit will be a lump sum based on contributions and investment returns. When you leave Defence, your money can be left in the fund, where it will continue to grow with investment returns until you meet a condition of release, or it can be rolled into another super fund.
If you’ve been in the Service for more than 12 consecutive months, you can keep your ADF Super account when you transition out and your new employer can contribute to ADF Super. In this case your insurance cover will change so contact the Commonwealth Superannuation Corporation (CSC) to find out what you need to know.
DFRDB is a defined benefit super scheme which closed to new members on 30 September 1991. If you are a DFRDB member, you will receive a lifetime indexed pension based on your final salary and years of service. Part of your benefit may be commuted into a lump sum, and you may receive an additional lump sum from your MSBS ancillary account, made up of voluntary personal contributions, amounts transferred in from other funds and other contributions, plus investment returns.
For more information contact the Commonwealth Superannuation Corporation (CSC).
Short-term goals are things you want to achieve within the next couple of years. These goals could be to pay off your credit card debt, buy a new TV, go on a holiday or buy a car. Whatever you have in mind, set yourself a realistic timeframe. The best way to save for short-term goals is to reduce your spending on non-essential items, like entertainment, dining out, memberships or subscriptions. It is often easier to stay on top of your spending if you use cash, EFTPOS or a debit card when shopping instead of using your credit card.
Make your savings work for you by putting your money into an account where it will grow. Savings accounts are great because you can earn compound interest on your savings. If you’re on a low income, you may qualify for one of the savings programs offered by some charitable organisations.