I Asked ChatGPT for the One Investment Smart Seniors Should Have

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If you’re a senior wondering where to put your money, ChatGPT’s suggestion is this: Add a reliable, income-producing component to your portfolio.

Specifically, this component should provide portfolio stability, so you don’t need to sell any other assets during market downturns, the AI tool said. But what exactly does this look like, and do the experts agree? Here’s what you should know.

Income-Producing Components as an Investment

ChatGPT gave three main reasons why seniors should have an income-producing component in their portfolios:

• Seniors typically need predictable cash flow to cover their expenses, which income-producing assets can provide.
• Income-producing assets generally offer more liquidity, which is beneficial for those who need quicker access to cash, such as in times of market downturns.
• Having an income-producing component can help protect other assets from being sold quickly in a downturn.

As for what that “income-producing” component might look like, ChatGPT suggested:

• Diversified portfolio of dividend-paying stocks, bonds and income funds
• Fixed income, annuities (with caution) or other cash-flow streams
• Cash or other low-risk instruments

GOBankingRates asked ChatGPT to narrow this down further by providing the one investment smart seniors should have. In response, it said: “A well-designed, diversified income-generating portfolio or vehicle that aligns with your risk tolerance, time horizon and income needs.”

According to the AI tool, this means prioritizing:

• Stability through safe bonds or short-term fixed income streams
• Growth and income through dividend-paying stocks or income-oriented funds
• Liquidity in the form of cash, so you don’t have to sell other assets at an inopportune time

Was ChatGPT Right?

Everyone’s investment portfolio is going to look different. After all, things like risk tolerance and time in retirement will influence which investments you should — and shouldn’t — have.

As for whether or not ChatGPT had the right idea, experts say the answer is complicated.

“While that answer sounds as though it makes a lot of sense, there are quite a few items it neglects in its broad suggestion,” said Chris Dixon, co-founder at Oxford Advisory Group. “Stocks are still subject to market volatility, cash can lose to inflation and bonds may grow slowly while locking up your assets. Tax-deferred accounts, like the most popular retirement accounts (401(k) or IRA), are subject to required distributions, regardless of whether it is a bad time to sell for the retiree.”

The term “income-producing component” is also rather broad. For example, a stock that pays dividends could count as income. But in some ways, so could your retirement account distributions — though you’re technically spending rather than growing that money.

Also, be wary of people who sell financial products. Some are legitimate, but not all.

According to the Federal Trade Commission, seniors in particular are targeted by scammers. In 2024 alone, just over 8,000 older adults reported losses of $10,000 or more. In comparison, that number was just 1,790 in 2020.

Getting Started With Income-Producing Assets

There are many ways to build your investment portfolio. You can either go it alone or work with a professional who has your best interests in mind.

Either way, you may want to have multiple options — not just one.

“Liquidity and an incoming revenue stream are both typically essential for maintaining a potentially secure and comfortable retirement,” said Daniel Gleich, CEO and president of Madison Trust Company. “However, in this ever-changing economic climate, one avenue of income tends to not be enough.”

To truly diversify your retirement portfolio and to build multiple income sources, you may want a combination of alternative and traditional assets. One way to go about this is with a self-directed IRA, which lets you invest in nontraditional investments — like precious metals, real estate or private business.

But again, be wary of scams. According to the Oregon Division of Financial Regulation, there was a case in which individual investors lost over $3 million in total due to a self-directed IRA scheme. To avoid this, get a second opinion on your investments, ideally from a licensed professional.

Editor’s Note: AI should not be used for financial advice. Consult a tax, legal or financial professional before making any major investment moves.

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