The continued rollout AI in conjunction with blockchain could help investors make decisions and open up new avenues for income. But despite these shifts, financial advisors will still play a key role, as DJ Windle writes today.
Later, Andrey Sergeenkov explains how earning interest on idle crypto assets can be a great way of making your money work for you.
The Future of Financial Planning Lies in AI and Blockchain
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The integration of blockchain and artificial intelligence (AI) technology in financial planning and portfolio construction holds immense potential for efficiency, accuracy and security in the industry.
In the field of financial planning, the integration of AI and blockchain technology could provide a much-needed upgrade. AI algorithms could analyze vast amounts of data to assist in making informed decisions regarding investments, taxes and insurance.
The algorithms could make real-time adjustments to financial plans, automate updates to plans based on changing legislation and reduce the risk of errors and fraudulent activities – all in a matter of seconds. This would lead to more efficient and accurate financial plans, freeing up time for financial advisors to focus on providing personalized advice and improving client relationships.
Traditionally, portfolios have consisted of a mix of stocks, bonds, cash and sometimes a few alternative investments. However, with the advent of NFTs (Non-Fungible Tokens), the future of portfolio construction could be changing.
NFTs allow for the fractional ownership and sale of any asset through smart contracts stored on a blockchain, potentially enabling portfolios to hold unique assets such as music albums, real estate, direct-held businesses, watches and artwork.
These new investment opportunities would allow clients of financial advisors to not only own unique assets, but to generate income from them in various ways – including NFT staking, rental income and royalty payments, and fractionally selling assets.
Blockchain and AI could also change estate planning. Smart contracts could be used to create, monitor and implement estate plans, potentially reducing the risk of processing problems. The use of AI algorithms in estate planning could provide real-time updates on changes in assets, the law and the market, allowing for a more accurate and up-to-date estate plan.
In general, the incorporation of AI and blockchain technologies into the financial industry will automate many routine and complex tasks, freeing up financial advisors to focus on higher-value activities that require their unique skills and expertise.
Despite these advancements, the human element of financial advice will remain critical. Clients seek not only knowledgeable financial advice but also a personal touch, and financial advisors who understand the human behind the client will continue to be in high demand.
– DJ Windle, CFP
Decrypting Crypto
Top 6 Crypto Passive Income Generators for 2023
Passive income is money generated from ventures in which an individual is not actively involved. For the most part, all you need to do is invest your money or digital assets in a particular crypto investment strategy or platform and watch it generate profit. In some cases, the earnings are fixed and predictable. In others, several factors beyond your control may come into play.
A typical way many try to make a return in crypto with little to no involvement is through buying and holding crypto – also known in the industry as “HODLing.” However, simply buying and holding a crypto asset for any length of time does not guarantee you will make a profit. In fact, it’s very possible you could lose money.
Here are some ways to earn passive income on crypto:
Proof-of-stake (PoS) staking: Proof-of-stake is a type of blockchain consensus mechanism designed to allow distributed network participants to reach an agreement on new data entering the blockchain. Validators earn interest on the staked funds for contributing to the validity of the network.
Interest-bearing digital asset accounts: Holders can take advantage of interest-bearing crypto accounts to earn fixed interest on their idle digital assets. Think of this as putting money in an interest-earning bank account. The only difference is that this service supports only crypto deposits.
Lending: As an investor, you can lend your digital assets to borrowers for a chance to earn interest. There are four main lending strategies you could opt for: Peer-to-peer lending, centralized lending, decentralized or DeFi lending and margin lending.
Cloud mining: With this, you can pay third parties to take up the technical aspect of crypto mining on your behalf. In essence, you pay a platform that offers such services a lump sum to rent or buy mining machines from their mining facilities.
Dividend-earning tokens: Certain tokens offer holders a fraction of the revenue of the company that issued them. All you need to do is hold the token, and you are automatically eligible to receive a certain percentage of the company’s revenue.
Yield farming: This is made possible by the dynamic operations of decentralized exchanges, which are basically trading platforms where users rely on the combination of smart contracts (programmable and self-executing computer contracts) and investors for the liquidity necessary to execute trades.
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The January rebound in equities and knockout employment report may have undermined a few buy-bitcoin narratives, but the real value proposition behind bitcoin lies far beyond Wall Street in emerging markets, where bitcoin is in strong demand.
Disclaimer: The information contained in this newsletter, and any information linked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. You should seek additional information regarding the merits and risks of investing in any cryptocurrency or digital assets.
