Could AI Transform How You Manage Your Retirement Investments?

Recent advances in technology have led to an innovative way to plan for retirement, especially for those who are looking to invest in alternative assets with a Self-Directed IRA.

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Artificial Intelligence (AI) is the lead player in this revolution. Computer programs can now perform tasks that typically have required human intelligence in the past. Chatbots such as ChatGPT, Gemini, and other AI software can help investors analyze data, potentially predict trends, and make decisions that aim to optimize their retirement portfolios.

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Let’s explore the exciting opportunities that AI can provide you if you’re interested in diversifying your retirement portfolio with alternative investments.??

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Potential Uses of AI for Investing in Alternative Assets for Retirement Planning?

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If you are a new or experienced investor, you likely have heard that it is considered best practice to diversify your portfolio. What does a diversified portfolio typically look like? A well-diversified portfolio typically has both standard products (stocks, bonds, and mutual funds) and alternative assets (real estate, private lending, precious metals, etc.). A Self-Directed IRA is a type of retirement account that makes this added layer of diversification possible.??

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Real Estate Investing and AI?

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Real estate is one of the most popular alternative investments held within a Self-Directed IRA. Here’s how AI can potentially help manage your real estate investment:

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Forecasting Real Estate Prices – By looking at historical and recent data on sale prices, rental costs, geographic location, and property data, AI can estimate the proposed value of a property. ??

Identifying Suitable Investment Property – AI can audit a property’s location, neighborhood characteristics, rental income potential, historical performance, and potential for appreciation. This can help you select a suitable investment property.

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Neighborhood Analysis - AI can help you choose an optimal neighborhood for your real estate investment by evaluating crime rates, school ratings, healthcare facilities, and more.

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Determining Rental Income Opportunities – By analyzing local rental market data, AI can potentially optimize rental rates and recommend possible rental prices.

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Predicting Maintenance – AI can help reduce unexpected expenses by predicting possible maintenance problems based on past data and current sensor readings of the HVAC system usage, water usage, and energy consumption.

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Screening Possible Tenants – By reviewing a tenant’s credit history, debt obligations, and rental history, AI can potentially identify high-risk tenants.

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Private Lending Investing and AI

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Private lending, also known as private debt or promissory note, is another popular alternative investment. Let’s dive into how AI can potentially help manage your private lending investment.

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Making Informed Decisions – AI can help lenders potentially make informed decisions about loan approvals by compiling information and checking the authenticity of information on submitted documents.

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Identifying Potential Fraud – By analyzing data that could indicate fraudulent activity, AI can help protect lenders from losses and generally create a smoother lending process.

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Risk Assessment – AI can possibly detect fraud and offer lenders insights into borrower behavior and market trends, giving lenders an extra layer of security.

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Setting Lending Rates – By scanning credit data and income statements of borrowers, AI can assess creditworthiness and determine appropriate credit limits to help set lending rates.

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Collection Management – AI can help lenders use targeted communications, payment reminders, and customized repayment plans for their borrowers.

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Is Investing Based on AI Safe?

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It is widely considered safe to use AI for retirement planning, but remember it is a new technology that is still evolving. Consider a few things before using AI. First, it’s important to be aware that AI’s effectiveness depends on the quality of its data as well as the individual’s ability to use the application. AI can be a great tool to utilize for investment research, but it’s also important to conduct due diligence.

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In addition, AI is built to perform some human tasks but does not replace our ability to make ethical decisions. It also cannot think of new creative solutions, empathize with others, or fully understand your investment needs. It is typically considered best practice to use both AI and consult the appropriate financial professional before making any investment decisions.

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The Bottom Line: AI is a Tool in our Toolbelt

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By harnessing the power of AI, investors can make smarter investment decisions, optimize their portfolios, and generally stay ahead of market trends. AI has the potential to increase efficiency and can help tailor retirement plans that evolve with investors’ needs. By combining AI, the expertise of financial professionals, and your own due diligence, you have the potential to thrive in the alternative investing sphere.

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Self-directed investing with AI possesses an abundance of potential opportunities. Looking to learn more? Schedule a call with me and read more in Madison Trust’s blog about unlocking the future of investing with AI.

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Madison Trust Company (“Madison”) is a passive Self-Directed IRA custodian, and, as such, does not provide investment advice, sell investments, or offer any tax or legal advice. Accordingly, Madison is not a fiduciary.? Madison is not affiliated with any financial professional, investment, investment sponsor, tax, or legal advisor. It is not Madison’s responsibility to review the prudence, merits, viability, or suitability of any investment directed by clients or to determine whether the investment is acceptable under ERISA, the Internal Revenue Code, or any other applicable law. Clients or potential clients are advised to perform their own due diligence in choosing any investment opportunity and/or professionals to assist them with an investment opportunity.?