People use Chatgpt for everything from meal planning to marketing strategies. Although generated AI platforms are prone to hallucinations, it is not bad to evaluate complex concepts and communicate them in simple terms.
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I recently gave this tip: "Pretend I'm my 12-year-old son, financially curious, but an ignorant middle school student. Explain to me how to invest like I was 12."
This is the highlight.
“"Investing is like planting a tree. You invest a little money now and over time it grows - like a tree starts to small and ends up giving you fruit, shadows or a cool place to climb."
It says: "Investing is when you make more money with money over time. Instead of just keeping the money in the goods (which won't grow), you can put it in what you can possibly do. Grow Your money, such as stocks, bonds or real estate. ”
It continues to elaborate on the stock. "When you buy stocks, you'll own a small portion of the company. If the company does a good job, your stock's value may rise. However, if the company does not do well, the value may fall."
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Chatgpt also explains how bonds are safer, but with less returns.
It also explains the value of long-term investment. "The idea is that over time, your investment value will grow. But it can take years, so don't expect to get rich overnight. It's like saving for a super cool game that costs $50 - a little bit every month, and one day, you'll have plenty of time," Chatgpt said.
It then emphasizes the importance of starting small – even adults can benefit from it. It says: "Even if you only have $10, it's a great start."
Chatgpt's thumbnail sketches are excellent in investment sketches, which are easy to access and fun for an active 12-year-old boy.
Next, I asked Chatgpt if it would be better for my son to put money into a high yield savings account or stock market.
"Money in a savings account is safe. With a 4% interest rate, your money will grow, but not super fast. If $100, you'll have $4 more in a year," Chatgpt said.
But for long-term growth, Chatgpt recommends stocks: "The goal is to make your money bigger, so when you grow up, you have a lot of money. Think of it as a seed as a money tree."
It's hard to argue with this logic.
Since my son has a windows change business, occasionally sums up cash furniture and receives a $25 per month stipend, I asked Chatgpt how he should consider allocating his $100 or so monthly income.
"A good rule of thumb is to start small and invest only money that you don't need instant goals. That way, if you lose some, it's no big deal and you can learn as much as you want. You don't have to invest in it. everything What you earn - you can save for entertainment, emergencies or a large future purchase, and more. A good starting point could be 10% to 20% of your monthly income. ”
This is what my son has been telling me since he started his local business last summer!
AI also recommends putting $10 stocks or ETFs and $5 to $10 a month into a "safe" savings account. What it shares is that keeping a buffer that is easy to use money can help you pay for surprises like broken bike chains, birthday gifts or events my son wants to attend. This is a great tip - and may also save me money as parents usually pay those "emergency" fees for their kids!
Finally, I asked Chatgpt which stocks my son should invest in.
"If you're ready to research a specific stock, it's important to remember that as a beginner, you might want to start with a company you already know or believe in. Do some research with your mom to identify the companies you think you'll grow in the next decade," Chatgpt said.
AI Gen suggests:
apple
Microsoft
Disney
Hasbro
Tesla
My son already owns Disney and Tesla and we've been thinking about Hasbro, Nike, Target and McDonald's. These stocks should grow over time, although they are all quite volatile in the current market.
When you are in your 12, 14, or even in your 20s and 30s, the volatility is OK, Chatgpt also points out. If you want higher stability, it is recommended that you study ETFs.
Chatgpt's advice to invest like he was when he was 12 years old was in this money. Try the following tips - maybe your tween or teenager will be better than listening to you!
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This article originally appeared on gobankingrates.com: I asked chatgpt to explain how to invest like I was 12 years old - that's what it says