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Why are we so risk averse when it comes to technology?


Unless you get lost on a desert island with a volleyball called Wilson, it’s impossible to miss the significant advances in technology we’ve seen over the past few years.

However, people are often wary of technology as a means of investing. Is it an accessibility issue or are we less adventurous than we think?

Advances in artificial intelligence (AI) have been phenomenal, and the business community has quickly embraced it. This is because AI allows us to run complex data models, predicting the probability of results in turbocharging time without any emotion or bias.

From the consumer’s point of view, AI stimulates the growth of so-called fintech companies, such as new types of lenders, who can call on a loan application in minutes, not days or weeks.

More recently, several fund managers in the U.S. have introduced AI technology to their platforms to gain an advantage. This is a step that helps to overcome natural human biases that can lead to failed decisions, such as selling off profitable stocks too quickly while maintaining bad stocks.

These biases and emotions have made it difficult for funds that are actively managed to defeat market indices, which has contributed to the growing popularity of exchange-traded funds.

On a personal level, people often fear AI.

Maybe we all watched too much Terminator movies. But consumers often hold mixed views on technology as a money management tool.

A survey in the UK conducted in 2019 found that seven out of 10 respondents were satisfied with the idea of ​​using AI to care for their elderly relatives. However, eight out of 10 did not trust technology in managing their money.

However, moods seem to be changing.

The report of technology giant Oracle for 2021 is entitled Money and carsfound that COVID-19 dramatically heightened financial anxieties and changed our relationship with money, forcing us to turn to technology for help.

This confirms that two out of three people worldwide trust robots more than humans to manage their finances. And six out of 10 now say they trust AI their money more than themselves. Already, 27% of consumers use one or another AI to manage their personal finances.

This is the growing adoption of AI – it’s not just about saving time or making faster decisions.

While money may seem black and white on paper, the reality is quite different.

Money is more than finance. It’s about emotions. We are talking about deep convictions. And it’s personal. Money gives us opportunity, choice and freedom. Our financial well-being also shapes our self-confidence. According to an Oracle study, 54% of consumers worldwide believe that their financial situation determines their self-esteem.

The key advantage of using the power of technology when it comes to investing in the stock market is that it takes away emotions. As I noted earlier, these emotions and biases can hinder our investment choices, and at worst, prevent us from investing at all.

When we emerge from a pandemic, new technologies – be it AI, digital assistants or analysts – are a big part of our lives. They also affect our personal relationship with money. As our confidence in new technologies grows, investors can become winners.

Any advice is general in nature and does not take into account the specific needs and circumstances of the viewer. You need to consider your financial situation, goals and requirements to determine the type of advice and products that best suit your needs. Jaaims Australia is the authorized representative of Jaaims Technologies, AFSL 519985.

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