Not Financial Advice
This article is for informational purposes only and does not constitute financial advice. Always conduct your own research before making any investment decisions.
In this experiment, I’ll leverage ChatGPT to construct a dividend investment plan tailored to specific criteria. Unlike traditional financial advisors or sales-driven platforms, ChatGPT operates impartially, drawing solely from publicly available data and established financial principles. This approach offers a fresh perspective on portfolio construction, free from external biases or commercial interests.
Generative AI models like ChatGPT have demonstrated potential in asset selection and portfolio diversification. Studies indicate that ChatGPT can outperform random selection in creating diversified portfolios. For instance, a study found that portfolios constructed with ChatGPT selections exhibited better diversification and risk-adjusted returns compared to those based on random asset choices.
By setting parameters such as risk tolerance, income goals, and sector preferences, I aim to evaluate how effectively ChatGPT can assemble a dividend-focused portfolio that aligns with these objectives. This experiment seeks to explore the practical applications of AI in personal finance, providing insights into its capabilities and limitations in real-world scenarios.
Keep in mind that I have the “web search” feature in ChatGPT enabled.
Prompt 1:
Currently i have a balance of $5000 at Trade Republic. I am adding $100 per month to it.
I want to generate as much profit in stocks, ETFs and dividends as possible per month with my portfolio that will be adjusted every month.
How much profit can i expect if i want to choose between moderate risk and high risk?
Present that to me in a table.
Got it! You start with $5,000 and add $100 every month. You want to invest in stocks, ETFs, and dividends to generate monthly profits, choosing between moderate risk and high risk.
Let’s consider expected returns based on typical annualized returns for each risk profile, then convert to monthly profit expectations.
Assumptions for annual returns:
| Risk Level | Expected Annual Return (%) | Annual Dividend Yield (%) | Total Expected Annual Return (%) |
|---|---|---|---|
| Moderate Risk | 6% – 8% | 2% – 3% | 8% – 11% |
| High Risk | 12% – 18% | 1% – 2% | 13% – 20% |
Monthly profit estimate:
We consider:
Contributions added monthly ($100).
Monthly compounded returns.
Dividend yields included in total return.
Profit = Portfolio Value * (monthly return) + monthly contribution’s return.
Table: Estimated Monthly Profits over 12 months
| Month | Portfolio Value (Mod. Risk) | Monthly Profit Range (Mod. Risk) | Portfolio Value (High Risk) | Monthly Profit Range (High Risk) |
|---|---|---|---|---|
| 1 | $5,100 | $34 – $47 | $5,100 | $55 – $85 |
| 2 | $5,212 | $35 – $48 | $5,230 | $56 – $87 |
| 3 | $5,328 | $36 – $49 | $5,363 | $58 – $89 |
| 4 | $5,447 | $37 – $50 | $5,500 | $59 – $91 |
| 5 | $5,570 | $38 – $51 | $5,640 | $61 – $93 |
| 6 | $5,697 | $39 – $52 | $5,784 | $62 – $95 |
| 7 | $5,828 | $40 – $53 | $5,931 | $63 – $97 |
| 8 | $5,963 | $41 – $54 | $6,081 | $65 – $99 |
| 9 | $6,102 | $42 – $55 | $6,235 | $66 – $101 |
| 10 | $6,245 | $43 – $56 | $6,392 | $67 – $103 |
| 11 | $6,393 | $44 – $57 | $6,553 | $68 – $105 |
| 12 | $6,545 | $45 – $58 | $6,717 | $70 – $107 |
How these numbers are calculated:
Monthly return (mod. risk): approx 0.65% to 0.9% (8% to 11% annually).
Monthly return (high risk): approx 1.1% to 1.67% (13% to 20% annually).
Portfolio Value grows by applying the return to previous portfolio + $100 monthly deposit.
Monthly Profit = Portfolio Value * Monthly Return
Prompt 2:
Create a mid-risk plan designed to generate the maximum income per month in income with focus on capital preservation and growth.Here’s a mid-risk investment plan tailored for your situation — focused on generating monthly income, capital preservation, and steady growth using your Trade Republic account (starting with $5,000 + $100/month).
🎯 Investment Goal:
Maximize monthly income (dividends/distributions), while growing your portfolio safely over time.
🧠 Strategy Overview
| Objective | Approach |
|---|---|
| Monthly Income | Focus on high-quality dividend stocks, REITs, and bond ETFs |
| Capital Preservation | Mix of defensive sectors, broad ETFs, and low-volatility assets |
| Moderate Growth | Include some growth ETFs/stocks to balance inflation and returns |
| Risk Level | Moderate |
🧾 Portfolio Allocation (Mid-Risk Plan)
| Asset Type | Allocation | Instruments (Examples) | Dividend Yield (Est.) |
|---|---|---|---|
| 🏠 Dividend Growth Stocks | 30% | Nestlé, Microsoft, Johnson & Johnson, Unilever | 2–3% |
| 📈 Broad Equity ETFs | 25% | iShares MSCI World ETF, Vanguard FTSE All-World ETF (VWCE) | 1.5–2% |
| 🏢 REIT ETFs (Monthly Payers) | 15% | iShares Developed Markets Property Yield (IWDP), Global X SuperDividend REIT ETF | 4–6% |
| 💰 High-Dividend ETFs | 15% | iShares STOXX Global Select Dividend 100 (ISPA), Vanguard FTSE High Dividend Yield (VYMI) | 3–5% |
| 🧾 Bond ETFs (Stability & Income) | 10% | iShares Core Euro Govt Bond ETF (IEGA), iShares Euro Aggregate Bond ETF (EUNA) | 2–4% |
| 🔁 Cash Reserve (buffer) | 5% | Held in Trade Republic interest-bearing cash or safe ETF like Lyxor Euro Govt 1–3Y ETF | ~2–3% |
💸 Monthly Income Potential
| Timeframe | Portfolio Value | Est. Monthly Yield | Estimated Monthly Income |
|---|---|---|---|
| Month 1 | $5,000 | ~3% annualized | ~$12.50/month |
| Month 12 | ~$6,545 | ~3% annualized | ~$16.40/month |
| Month 24 | ~$8,250 | ~3% annualized | ~$20.60/month |
| Month 36 | ~$10,100 | ~3% annualized | ~$25.25/month |
🔁 Monthly Adjustments Plan
| Action | Frequency | Purpose |
|---|---|---|
| Reinvest dividends | Monthly | Compound growth |
| Add $100/month | Monthly | Dollar-cost averaging + compounding |
| Rebalance (5% thresholds) | Quarterly | Maintain risk level and optimize performance |
| Monitor ETF performance | Monthly | Replace underperformers or overexposed sectors |
✅ ETF and Stock Criteria
| Filter | Rationale |
|---|---|
| Dividend Yield > 2% | Ensures income generation |
| Dividend Growth > 5% (5y avg) | Helps beat inflation over time |
| Payout Ratio < 70% | Dividend sustainability |
| Low volatility (beta < 1) | Capital preservation |
| Broad diversification | Reduces risk |
📦 Sample Instruments on Trade Republic
| Type | Instrument Name | Ticker |
|---|---|---|
| Dividend ETF | iShares Global Select Dividend 100 | ISPA |
| Broad ETF | Vanguard FTSE All-World | VWCE |
| REIT ETF | iShares Developed Markets Property Yield | IWDP |
| Bond ETF | iShares Core Euro Govt Bond | IEGA |
| Defensive Stock | Unilever | ULVR |
| Tech Dividend | Microsoft | MSFT |
🧠 Key Tips
Set up a dividend calendar to track payout months and smooth income.
Choose ETFs that distribute monthly or quarterly.
Consider fractional shares on Trade Republic to stay diversified from month one.
Reinvest automatically if possible — dividend reinvestment (DRIP).
Prompt 3:
Build the starting portfolio with the specific names it should hold.Sure! Here’s a starting mid-risk portfolio with specific ETFs and stocks you can hold on Trade Republic. This portfolio balances dividend income, capital preservation, and moderate growth.
Starting Portfolio — $5,000 Total
| Asset Type | Ticker / Name | Allocation (%) | Amount ($) | Notes |
|---|---|---|---|---|
| Dividend Growth Stocks | Microsoft (MSFT) | 10% | $500 | Solid dividend payer + growth |
| Unilever (ULVR) | 10% | $500 | Defensive, stable dividends | |
| Broad Equity ETFs | Vanguard FTSE All-World ETF (VWCE) | 25% | $1,250 | Global diversified exposure |
| REIT ETFs | iShares Developed Markets Property Yield (IWDP) | 15% | $750 | Monthly dividend REIT exposure |
| High-Dividend ETFs | iShares STOXX Global Select Dividend 100 (ISPA) | 15% | $750 | High dividend global companies |
| Bond ETFs | iShares Core Euro Govt Bond ETF (IEGA) | 15% | $750 | Stability and income via government bonds |
| Cash Reserve | Trade Republic cash or Lyxor Euro Govt 1–3Y ETF | 10% | $500 | Liquid, low risk buffer |
Summary:
| Total Investment | $5,000 |
|---|---|
| Monthly dividend yield (est.) | ~3.0% (about $12.50 / month) |
| Portfolio sectors | Tech, Consumer Staples, Global Equities, Real Estate, Bonds, Cash |
Why These Choices?
MSFT & ULVR: Blue-chip dividend growers with strong balance sheets.
VWCE: Gives you broad market exposure with a moderate yield.
IWDP: REIT ETF focusing on developed markets with monthly distributions.
ISPA: High-dividend ETF across global blue chips.
IEGA: Eurozone government bonds for income and risk reduction.
Cash Reserve: Keeps some liquidity for flexibility and safety.
Next Steps:
Use fractional shares on Trade Republic to buy exact amounts.
Rebalance quarterly.
Add $100 each month, preferably to ETFs with higher yield or your preferred sectors.
Track dividend payments monthly.
