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.
Never fear, an expert is here to review the artificially intelligent (AI) chatbot’s work and let us know what works — and what doesn’t. Thomas Brock, chartered financial analyst (CFA) and certified public accountant (CPA) and financial reviewer at Annuity.org, reviewed the AI’s picks and recommended some modifications.
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ChatGPT’s Original Portfolio
The AI chatbot recommended 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).
ChatGPT cited financial planning 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.
“This structure spreads risk across multiple asset classes so your investments don’t rely on one market alone,” ChatGPT said. The portfolio totaled 70% stocks when combining U.S. and international allocations.
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The Expert’s Key Modifications
“ChatGPT’s portfolio recommendation is sound,” Brock said. However, he identified areas where the allocation was “a bit light on the growth front” for someone with decades until retirement.
Brock recommended increasing total stock allocation to 80% by raising the allocation to international stocks. “This mix better approximates the global distribution of publicly-traded stocks (currently about 60% U.S. stocks and 40% international stocks),” he said.
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.
The Real Estate Disagreement
Brock’s biggest departure from ChatGPT involved eliminating the real estate allocation entirely. “A portfolio with an 80% allocation to global stocks has ample exposure to embedded real estate assets,” he said.
Building out a distinct allocation to a real estate investment trust is unnecessary according to Brock. This challenges conventional wisdom about adding REITs for diversification when broad stock indexes already contain real estate companies.
The Gold Fund Switch
Brock agreed with maintaining gold exposure but recommended switching from GLD to GLDM. The reason is straightforward: lower costs. GLDM has an expense ratio of 0.05% versus 0.10% for GLD according to Brock.
“It offers plenty of liquidity to retail investors,” he said about the lower-cost alternative. The 0.05% difference seems small but compounds significantly over decades.
The Liquidity Reserve Addition
Brock’s final recommendation added an element ChatGPT didn’t include: establishing a 2.5% liquidity reserve via a competitive money market mutual fund. “This will give you some financial flexibility and a yield of 3.5% to 4.0%,” he said.
In other words, market downturns create buying opportunities that investors with dry powder can exploit.
Editor’s note: This article is for informational purposes only and does not constitute financial advice. Investing involves risk, including the possible loss of principal. Always consider your individual circumstances and consult with a qualified financial advisor before making investment decisions.
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This article originally appeared on GOBankingRates.com: I Asked ChatGPT To Pick My 2026 Investment Portfolio — Then Had a Wealth Manager Review the Picks
