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GOBankingRates’ editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services – our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines<\/a> and our products and services review methodology<\/a>.<\/p>\n 20 Years Trusted by We asked ChatGPT to create a diversified portfolio for a 40-year-old investor with 20 to 25 years until retirement. Building an investment portfolio requires balancing growth potential with risk management, but generic allocation models might miss opportunities for optimization based on current market conditions and asset correlations. <\/p>\n Never fear, an expert is here to review the artificially intelligent (AI) chatbot\u2019s work<\/a> and let us know what works \u2014 and what doesn\u2019t. Thomas Brock, chartered financial analyst (CFA) and certified public accountant (CPA) and financial reviewer at Annuity.org<\/a>, reviewed the AI\u2019s picks and recommended some modifications<\/a>.<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n ChatGPT\u2019s Original Portfolio<\/p>\n The AI chatbot recommended<\/a> a growth-focused but diversified structure: 50% U.S. stocks via Vanguard Total Stock Market ETF (VTI), 20% international stocks through Vanguard Total International Stock ETF (VXUS), 20% bonds using Vanguard Total Bond Market ETF (BND) or iShares Core U.S. Aggregate Bond ETF (AGG), 5% real estate with Vanguard Real Estate ETF (VNQ) and 5% alternatives via SPDR Gold Shares (GLD).<\/p>\n ChatGPT cited financial planning<\/a> guides suggesting people in their 40s keep roughly 70% to 80% of portfolios in stocks with the rest in bonds and other assets to balance growth and stability.<\/p>\n \u201cThis structure spreads risk across multiple asset classes so your investments<\/a> don\u2019t rely on one market alone,\u201d ChatGPT said<\/a>. The portfolio totaled 70% stocks when combining U.S. and international allocations.<\/p>\n \u00a0<\/p>\n The Expert\u2019s Key Modifications<\/p>\n \u201cChatGPT\u2019s portfolio recommendation is sound,\u201d Brock said. However, he identified areas where the allocation was \u201ca bit light on the growth front\u201d for someone with decades until retirement<\/a>.<\/p>\n Brock recommended increasing total stock allocation to 80% by raising the allocation to international stocks. \u201cThis mix better approximates the global distribution of publicly-traded stocks (currently about 60% U.S. stocks and 40% international stocks),\u201d he said.<\/p>\n The expert suggested reducing bonds to facilitate higher stock allocation. This shift recognizes that a 40-year-old has time to weather market volatility and benefit from equity growth.<\/p>\n The Real Estate Disagreement<\/p>\n Brock\u2019s biggest departure from ChatGPT involved eliminating the real estate allocation entirely. \u201cA portfolio with an 80% allocation to global stocks has ample exposure to embedded real estate assets,\u201d he said.<\/p>\n![\"\"](\"https:\/\/cdn.gobankingrates.com\/wp-content\/uploads\/2023\/11\/icon-20.svg?webp=1&quality=75\"){kind=icon}
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