The impact of AI on investing

*This content is brought to you by Brenthurst Wealth.By Lloyd Uren*.AI is suddenly all around us, stirring up emotions ranging from amazement to outrage at the capabilities on display. It seems as if every aspect of society is being affected by this new technology, and the world of investing is no different. The question that you need to ask yourself is: is it hype or is it truly helpful.Unfortunately, at this very early stage of development it's difficult to make a call on whether AI is going to transform our lives, or as some fear, take over our lives..When it comes to investment planning, it's easy to believe that these sophisticated models can outperform mere humans. The speed at which information is processed by these AI models is mind-blowing, with bespoke AI trading tools revolutionising high-speed trading..This might be of interest to professional traders and money managers, but for ordinary investors that's far less important. For the majority of us, it's more about finding ways to simplify the investment process. Especially if that will contribute to lower fees..These are clearly important benefits, but I'm not convinced that going all in on AI investment tools and services is a sound move at this stage..Data accuracy and privacy concerns.With the technology, and the companies behind the technology, still unproven there are obvious concerns about balancing convenience and data privacy..I completely get the convenience and insight that comes from logging into your banking or trading app to see a detailed breakdown of your spending habits or your portfolio. It's difficult to argue against the convenience of the banking app categorising your transactions and suggesting ways to save money based on your spending patterns..It's like having a personal financial advisor in your pocket, helping you create a budget that works for you..However, one of my concerns about relying solely on AI-powered insights or advice is the question about the accuracy and bias of these models. A financial provider can easily programme the tool to suggest products or solutions that are more in its favour than yours..And, of course, there's the ever-present danger of your personal and sensitive information being leaked if criminal hackers break through security systems..Robo-advisers .You might have heard of robo-advisers – these are AI-driven tools that claim to create customised financial plans based on your goals, income, and spending habits..For instance, if you're planning for retirement, a robo-adviser can help you design a savings plan that fits your timeline and risk tolerance. These digital tools have been around for some years already, but are enjoying a rebirth on the back of chatbot and virtual assistant technology powered by generative AI models..These have become so good that it's sometimes difficult to tell whether you're talking to a real human or a chatbot..While robo-advisers can simplify investing, they aren't perfect. They can't replace the nuanced understanding a human advisor brings to the table: a human advisor might notice subtle details about your financial situation that an AI wouldn't pick up..So, while these tools are helpful, don't rely on them entirely. Keep building your financial literacy and consult with a human advisor when you're unsure..Benefits among the risks.One way that AI can benefit you as an investor is to invest in the right AI stocks at the right time. If you've been following the NVIDIA story over the past year or two you'll be aware that its share price has rocketed since the beginning of 2023 from around $40 to $120 on the promise of mega profits from the AI boom..As noted in a recent Investec blog, the real value for investors lies in adopting the same approach as during gold rushes of eras gone by: rather than backing individual prospectors to strike gold, put money behind the people selling picks and shovels to the prospectors..You can get direct access to the likes of NVIDIA and other hardware makers like ASML through popular investment platforms, or through funds invested in these AI opportunities. Brenthurst uses a number of these funds to give South African clients exposure to these high-growth stocks..I have no doubt that AI is going to insert itself further into our daily lives as the technology matures. And I'm sure we'll find fantastical applications and solutions based on the technology. But I don't think that they're at the level yet to be fully trusted. Not for your financial needs anyway..* Lloyd Uren is a junior planner at Brenthurst Wealth Granger Bay, Cape Town lloyd@brenthurstwealth.co.za .Read also:My offshore investing journey3 ways to optimise your tax at retirementDon't let inflation eat your pension

The impact of AI on investing

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