Analyzing 8 Investment Tips for Doctors from ChatGPT

AI is becoming pervasive in our culture. And I don’t think it’s going anywhere. No, I don’t think it’s going to replace us anytime soon. As Arnold Schwarzenegger recently said, “I’m not as concerned about artificial intelligence as I am about basic stupidity.” But, it is here likely to stay. With that in mind, I’ve been curious as to what investment tips ChatGPT would give to us.

I’ll admit that I’ve been a slow adopter of ChatGPT. But after testing out the Doximity AI tool recently, I’ve given more and more thought as to how we can use it. That is what ultimately led to my curiosity regarding its investment advice.

I began really skeptical. Obviously, ChatGPT and similar AI powered tools work by gathering available information online and consolidating it based on a human input prompt. And, as those of us in medical research know, “garbage in, garbage out.” And there is plenty of garbage out there in terms of investing advice.

Yet, fearlessly I went forward. Into ChatGPT I typed, “What is the best way for doctors to invest $10,000?”

Here are the results…

8 investment tips for doctors from ChatGPT

This is a direct copy & paste of its response to my prompt…everything else is all me just like all of my other posts!

Doctors, like anyone else, should approach investing with a thoughtful strategy tailored to their financial goals, risk tolerance, and time horizon. Here’s a comprehensive plan for doctors looking to invest $10,000:

Emergency Fund: Ensure you have a solid emergency fund covering at least 3-6 months of living expenses in a high-yield savings account. This provides a financial buffer for unexpected expenses or emergencies.
Pay Off High-Interest Debt: Prioritize paying off any high-interest debts, such as student loans or credit card balances. Reducing debt burden frees up more cash flow for investing and provides peace of mind.
Maximize Retirement Contributions: Take advantage of tax-advantaged retirement accounts like a 401(k) or IRA. Contribute the maximum allowable amount to benefit from tax deferrals and potential employer matching contributions, accelerating your retirement savings.
Diversified Portfolio: Allocate your $10,000 across various asset classes to spread risk and optimize returns:
- Stocks: Consider investing in a mix of individual healthcare sector stocks or healthcare-focused mutual funds or ETFs. This allows you to benefit from the growth potential of the healthcare industry.
- Bonds: Invest in high-quality bonds or bond funds to provide stability and income. Municipal bonds or treasury bonds are popular choices for conservative investors.
- Real Estate: Explore real estate investment trusts (REITs) or crowdfunding platforms specializing in healthcare real estate. Healthcare properties tend to be resilient and can offer attractive returns.
- Index Funds or ETFs: Choose low-cost index funds or ETFs that track broad market indices to gain exposure to the overall market while minimizing fees.
- Alternative Investments: Consider alternative assets like private equity or venture capital funds focused on healthcare innovation for potential higher returns.
Continuing Education: Invest in your professional development through courses, certifications, or conferences that enhance your medical expertise or business acumen. This can lead to career advancement and increased earning potential.
Risk Management: Understand your risk tolerance and invest accordingly. Doctors often have stable income streams, allowing for more aggressive investment strategies if they’re comfortable with the associated risks.
Regular Review and Adjustment: Monitor your investments regularly and rebalance your portfolio as needed to maintain your desired asset allocation and adapt to changing market conditions.

By following these steps, doctors can prudently invest $10,000 to build wealth, achieve financial security, and work towards their long-term financial goals.

Analyzing these 8 investment tips from ChatGPT

Wow.

I am honestly very impressed. I expected a lot worse. Certainly I imagined some component of an active investing strategy to emerge. Especially with the sheer amount of propaganda out there about active investing on the internet.

Instead, this was very reasonable advice. I dare to say it’s better advice than one would receive from the average investment advisor. Why? Mainly because it is completely unbiased.

Is anything wrong here?

Really, the only thing that I don’t agree with here is the small section on alternative investments.

I think that investing in things like direct or indirect real estate are better options. Investing in start ups should really only be limited to “fun money” that you could lose and not miss it.

Furthermore, doctors too often succumb to familiarity bias when investing in start ups or the like. So I think investing in healthcare start ups, certainly with any significant portion of your portfolio, is particularly fraught with issues and risk.

Is anything missing here?

ChatGPT could certainly go more in depth about pretty much all of these topics and investment tips.

Topics like creating your asset allocation and rebalancing require a more action oriented discussion (like this) before someone can go ahead and implement the strategies.

In all, I can’t fully blame AI for not going deeper. I did put in a word limit for its response.

Meanwhile, outside of REITs, real estate investing gets no love here. I do believe in real estate, especially active investing, to be a wealth accelerant. But it is certainly not necessary for all doctors to invest in. So no major qualms there.

There is also very minimal mention of the importance or minimizing taxes and strategies to do so. That’s a miss in my book. But again, with a word limit, I think the right stuff was prioritized above this is most cases.

How does investment advice from ChatGPT measure up to mine?

Pretty darn close it turns out.

Taken from this post, here are the top 11 ways I believe doctors should invest their money:

Self-improvement
Paying off debt
Into your marriage or partnership
Stock market
Bonds
High yield savings account (emergency fund)
Passive real estate investments
Active real estate investments
Into your practice
Buying treats
Into a side gig

Pretty much all of these are covered directly or indirectly in these investment tips from ChatGPT. In fact, 6 of them are brought up explicitly. That’s pretty good!

Can investment tips from ChatGPT replace a financial advisor?

Yes and no. Let me explain.

First, I don’t believe that a knowledge gap is the true barrier between a physician and the ability to invest on one’s own.

Building up your financial education (you can start right here) does not take too long and is not too arduous. After that, it’s all about developing the automated financial habits that will make you successful. Things like creating a savings rate of at least 20% of your gross income and investing it automatically each month into broadly diversified, low cost index funds.

Once you do that, you are pretty much set and it will not take much of your time.

Again, I don’t think the actual knowledge is the barrier. The barrier is transitioning that knowledge to action. People in general struggle with this. But doctors are even worse, likely due to immense amounts of decision fatigue.

And this is where the actual benefits of a financial advisor come in. A good financial advisor will take action using the evidence based strategies espoused above by me and ChatGPT to meet your financial goals.

As of yet, ChatGPT can’t do that. It can only give the advice. It can’t act on it. This is basically what robs advisors from brokerages like Fidelity do. But they still charge a fee (albeit smaller than a traditional advisor).

So, if you are someone who needs help taking the action, you still need a good financial advisor giving you the right advice at a fair price.

But, ChatGPT, along with your own self education, can help you identify the right advice and the corresponding fair price. Because its advice is better than any advisor that will recommend an active investing strategy. That much is more than I expected to be honest.

My final take

My expectations were low. But certainly ChatGPT exceeded them.

However, I still need to temper things. The depth of the response and the actionability resulting from it are limited.

We still need to be active and informed when we invest, even if we plan to use a financial advisor.

After all, it is the human behavioral side of investing that is most responsible for our financial success or failure, our achievement or not of financial freedom. And AI can’t replace that!