UPDATE: In a bold and unconventional experiment, a user has tasked ChatGPT to generate a portfolio of FTSE 100 stocks aimed at producing a passive income of £2,000 per month. This ambitious goal translates to an annual income of £24,000, requiring a substantial investment of £480,000 at an average yield of 5%.
This development comes as many investors seek innovative ways to bolster their income amidst fluctuating market conditions. The urgency for reliable income streams has never been greater, particularly as inflation continues to impact purchasing power.
The experiment yielded recommendations from ChatGPT, which included notable companies like Legal & General Group and M&G. ChatGPT touted Legal & General for its impressive yield of around 8%, though the actual trailing yield stands at 9%. Despite its reputation as a “pension and insurance heavyweight,” the chatbot failed to mention that Legal & General’s stock performance has stagnated over the last decade.
Next, ChatGPT recommended M&G, another financial sector giant with a similar yield of approximately 8%. The user expressed a preference for M&G, citing its better performance compared to Legal & General, emphasizing the importance of diversification in stock selection.
However, the chatbot’s suggestions raised eyebrows with its recommendation of National Grid (LSE: NG). ChatGPT claimed that the energy utility provides “portfolio stability” with a dividend yield of 6%. In reality, the yield is significantly lower at 4.1%, raising concerns about the company’s hefty £60 billion investment requirement for grid modernization by 2029 and over £40 billion in existing debt.
In addition to these picks, ChatGPT included consumer giant Unilever, which has underwhelmed investors with its 3.25% dividend yield, and oil titan Shell, noted for its 3.9% yield bolstered by strong cash flow and shareholder returns. Lastly, the chatbot mentioned telecommunications company Vodafone, mistakenly citing a yield of 10%, when it has recently cut its dividend in half, leaving a yield of just 4.27%.
While some recommendations may hold merit, experts caution against relying solely on AI for stock selection. The personal nature of investing necessitates thorough research and risk assessment, making the reliance on a chatbot for portfolio building a precarious choice.
As the market landscape continues to evolve, investors are urged to conduct their own due diligence and consider the long-term implications of their choices. The drive for passive income remains strong, but the path to achieving it through stock investments requires careful planning and strategy.
This experiment highlights the ongoing interest in integrating technology with personal finance, as investors look for innovative solutions to secure their financial futures.
For those curious about the potential of stocks like National Grid, expert Mark Rogers of The Motley Fool suggests keeping an eye on standout stocks that may offer more reliable returns in today’s dynamic market.
Stay tuned for more as we track developments in the FTSE 100 and the ever-changing landscape of investment strategies.
