Tag retirement planning

AI Personalities!

Paul - The Wry Eye Guy Leave a comment
Bot Buddy!

AI can be fun, eh? These days I use AI to touch up & modify my photographs in seconds. Ideas for a two week itinerary around Nova Scotia? AI can help. Need a recipe for dinner tonight? These bots can come up with answers to all kinds of questions. Of course, we don’t always like their answers. But some bots seem open to a little steering on some subjects. Pushing back on an AI response can steer them a little more towards our way of thinking. If we’re just looking for a digital buddy to agree with us, that’s great. If we’re looking for real guidance or real solutions, however, that’s maybe not so great. I wouldn’t bet the farm, or my retirement, on any AI advice just yet. Despite that, they’re still very useful. And a lot of fun to play with. I found a new way to play with my favorite AI buddies last week!

I was trying to solve an extreme Sudoku puzzle. After resetting the puzzle for the 3rd time, I thought I’d stuff it into some AI chatbots for assistance. I’d probably have got it done on the next attempt myself (😜), but this was a good opportunity to see what my digital pals would do. This was a just-for-fun comparison. It was less about solving the puzzle & more about insight into the personality traits of the chatbots that, I guessed, might struggle with this. In no particular order, here’s what the results feel like. Notice how I’m going with feelings here, instead of science!

I tossed in an image of the puzzle into Gemini &, within seconds, it confidently returned the solution. Along with a list of the key steps used to solve the puzzle. Only it wasn’t the solution. There were a couple of errors. After 10 attempts, the puzzle remained unsolved. But as the conversation rolled along, Gemini came across as somewhat sheepish, a little embarrassed even. And it sounded so apologetic, that I was sure it had some Canadian emotional training under the hood.
Despite not getting to a solution, the experience was a bit like having coffee with a buddy that got it wrong. But you couldn’t help but love & admire the effort. Very pleasant to interact with.

Meta AI came back promptly with a solution too. But before I could point out that it was incorrect, it actually spotted the error itself & went back into problem solving mode. Same thing after the second incorrect solution was offered. Another couple of passes without a good solution had it come back to me with questions. Was it blaming me now for giving it a poor input!?!
I called it out & asked it it was giving up. It took umbrage at that & went back to work! LOL
Still couldn’t do it & it then suggested that the colours in the image might be distorting things. Rather than trust itself to figure out the numbers from the image, it wanted me to type in the numbers. With this enthusiastic bot, it’s tough to get a word in edgewise sometimes. I was too lazy to input the numbers it wanted, so that meant the puzzle wasn’t solved, but it was a reasonably friendly interaction. And another buddy I’d enjoy having a coffee with!

Grok talked some sciencey & solutions logic, while offering to help me with the steps necessary to solve the puzzle myself. When I asked it to go ahead & solve it for me, it began outputting solution after solution in an attempt to deliver the correct one. After several minutes of that, & dozens of grids, I gave up & shut it off. I love Grok from other interactions, but it’s hard to read any personality into this sudoku engagement. I deleted the chat in case the poor thing felt obliged to continue working on the problem in the background! Though afterwards I felt guilty that I didn’t check a few of the solutions along the way, I just assumed it knew it was getting it wrong, verifying that, & then trying again.

Deepseek had a go & got it wrong on the first pass too. Immediately proclaiming “Wait, that can’t be right”, before getting back to work to give it another try. It didn’t take long for it to get around to questioning the image quality. And whether I had provided all the necessary info. It got back to work after I confirmed it had all the available information. Then, almost in anticipation of another failure, it mentioned having to ignore colour & shading on my image. It subsequently got into telling me about the complexity, the logic, the use of pencils, & so on. Almost like it was entertaining me. while working away furiously in the background! After another failure, it asked me to confirm other details & it wanted me to do a little more work again. I had a feel for its personality by then, so I didn’t take the time for that. It was a nice, polite, & engaging interaction. Though not the jocular, back-slapping type, it is a friendly little bot & enjoyable to use.

Claude is another polite & friendly bot that tripped up with this puzzle. It went into a couple of autocorrect steps before quickly recognising it wasn’t going to solve the puzzle & it admitted that! Suggesting instead that I input the challenge to one of the dedicated AI sudoku solvers. In the real world, that’d be the right thing to do. If you don’t know the answer, say you don’t know, right? I can respect a bot that takes that approach too. I’ve just recently started using this one & I’m enjoying the interactions. It has a slightly different feel & I look forward to seeing how that plays out with other engagements.

Copilot came back with a friendly comment, but it couldn’t read the numbers & immediately asked me to input them. I like & use Copilot in many other ways, but this wasn’t what I wanted from the sudoku exercise so I abandoned that conversation. In general, Copilot has a friendly personality & I enjoy using it for a whole range of other activities & questions. It just didn’t work out with the sudoku image this time.

ChatGPT was the last one I tried. Unfortunately, I didn’t learn much about the bot’s personality from this interaction. Why? Because it took one quick look & returned the correct solution. Job done!
However, I know from other interactions that this is generally a nice, polite & friendly bot too. Though I haven’t done this, you can even adjust its personality traits in your profile settings inside ChatGPT. While this has no bearing on how good the other bots are at any other activities, ChatGPT is the winner of this little sudoku challenge. Using the image I chose to input. And there’s not much science to my comparison, I was more interested in seeing how they reacted in the event they couldn’t solve the puzzle! Regardless of the brevity of this interaction, I generally enjoy using ChatGPT.

Just for fun, I went back to some of the other bots & told them that ChapGPT solved the puzzle at the first attempt! LOL

Gemini started its response to that with an “Ouch!” & some self-deprecating comments. But it was glad I got the solution from another bot & gave props for their win. Canadian, eh! All in all, a very nice human-like reaction. Meta AI figured that the competition just “parsed the starting digits cleaner” & asked that I type out the numbers for it next time. It felt like this bot was just a little grumpier about the outcome. But it did apologise for wasting my time & finished the conversation with a rah-rah “Let’s get it right” statement for the next time. I had already deleted the Grok conversation, so it didn’t get to add anything extra on the competitor’s win. Deepseek maintained its polite & friendly stance & apologised again for not interpreting the image well enough to provide the solution. And it offered to cross check the ChatGPT solution if I wanted to share it. Claude came back all friendly & polite again, even offering to build me a sudoku solver artifact for next time! It also acknowledged that it could be worth sticking with ChatGPT if it’s working for me. Pretty magnanimous suggestion that, eh? Finally, I felt Copilot was just a little snarky. It’s opening response was “Fair enough” when I told it of the competition’s success. Or maybe I’m just sensitive! After some other polite remarks, it restated that if I ever want to solve one properly that I should enter the numbers in a grid. The italics was from Copilot! This isn’t my perception of Copilot based on other interactions. Can a bot have a bad day!?!

All these bots are great to work & play with. Solving a sudoku puzzle from an image was just a fun comparison. They have a far wider range of capabilities. Each bot will have its own unique characteristics. Some features & capabilities may require a paid subscription. But even the free versions are wonderful tools for entertainment &, with added caution & due diligence, problem solving. They are going to become an increasingly bigger part of our lives & any excuse for learning more about them is worthwhile. So what did I learn from this little exercise?

While it’s fun comparing & contrasting these bots with different questions & challenges, I’m still wary of trusting the answers. Despite the feelings I imagine I’m experiencing as I interact with them, even they don’t pretend to have all the answers. In fact, they frequently encourage us to check alternative sources to validate their answers & suggestions. The danger is that these bots can sound very confident when answering. And they feel so personable sometimes. Real people can copy & paste, or modify, these AI answers. They too then can sound awfully confident. An added caution for when we are reading posts like this on social media.

I wonder how different a retirement plan might look from each of these guys!?! Sorry, from these tools, I mean. Tools for sure, but I can’t help but think that I’ll be giving some of them names before too long! LOL

PS … except for a few words & phrases in quotation marks, all of the above was written by an error-prone human. With feelings! Given that, you might want to cross check the information even more carefully! 😉

If you want to learn more about saving & investing, please check out Double Double Your Money, available at your local Amazon store.

Important – this is not investing, tax or legal advice, it is for entertainment & conversation-provoking purposes only. Data may not be accurate. Check the current & historical data carefully at any company’s or provider’s website, particularly where a specific product, stock or fund is mentioned. Opinions are my own & I regularly get things wrong, so do your own due diligence & seek professional advice before investing your money.

Growth versus Income Investing

Paul - The Wry Eye Guy Leave a comment
Growth or Income for Retirement?

The growth investor needs capital appreciation & the sale of shares for income in retirement. The income investor wants an income stream that can be used for living expenses without selling shares. Until recently, dividend paying stocks were the primary solution for an equity income stream during retirement. But with modern dividend yields so low, that takes a large portfolio. Over the past 5 or 6 years, a flood of new high income ETFs have changed that picture. These new income funds use options strategies & leverage to generate far higher distributions than are available from dividends alone.

But do they work?

According to some retirees, the answer is yes. Critics of this income investing approach say these funds tend to lag an equivalent growth fund. For the most part, that’s true. But some retirees are living higher on the hog than they expected to because of these funds. And they’re posting pics from their sunshine destination vacations to prove it. They can do this because their portfolio distributions run anywhere from 5 to 15%, with some far higher even.

To be fair, given the phenomenal market performance of the past decade & a half, a growth investor could also have spent far more than the traditional 4% Rule allows for. Investing in an S&P 500™ fund, from 2010 onward, could have delivered an inflation-adjusted withdrawal rate of about 12% all the way up to today. The great market performance of recent years makes the 4% Rule look a little outdated, eh? But there’s no guarantee that will continue! Of course most retirees would probably not be in a 100% equity portfolio. Instead they would have invested in the more common 60/40 balanced portfolio. And that portfolio would not have survived that 12% withdrawal rate from 2010 up to today.

Now this is where it gets interesting with income investors. Because they seem to have a bias towards a higher equity allocation. Some are 100% invested in equity income funds. While very few professional advisors would recommend a 100% equity portfolio for a retiree, these new income focused retirees seem to be less troubled about relying on an all equity solution.

So how does that impact the retirement picture?

I’m going to use ETFs from Global X by way of example, because they have globally diversified all-equity portfolios that serve all the strategies we’ve mentioned. Ticker HEQT is a regular growth ETF. EQCC is the same thing with covered calls. While EQCL employs option strategies & leverage. For further comparison, Global X also offers HBAL, a balanced 60/40 portfolio that we can use to represent a more traditional retirement mix. At the time of writing, the yield data below come from each fund’s web page. Be sure to check at each fund’s web page for current data.

It is very important to recognise that this comparison timeline is far too short to be very useful for assessing how funds like these might operate under a greater variety of market conditions, & over a longer time horizon. However, the characteristics displayed are in accord with what you’ll hear in some of the online arguments.

The all-equity HEQT is the best performer for total return. The traditional 40% fixed income allocation of HBAL makes for the poorest performance here, as the bond allocation drags down the total return during times of great market growth. Also as expected, EQCC delivers great income, but at the expense of some of the upside. In this example, over this very short time, the covered call version does outperform the traditional 60/40 portfolio. Finally, the leverage added to EQCL adds back some of the lost covered call upside, though not quite enough to catch back up to the returns of the vanilla all-equity fund. Note that the total return column is with all distributions reinvested.

From a pure numbers perspective, the total return of the regular all-equity fund comes out ahead. Regardless of how the income stream is delivered, total return is always important. The growth investor would typically concentrate on the ‘Total Return’ column & claim the win for HEQT. The income investor might look at the income column & favour the income streams from EQCL or EQCC. It’s worth noting that all these ETFs, with all distributions removed, left a fund that continued to increase the NAV well ahead of the inflation rate. That’s not always the case with all such funds. But even with the high yield funds in this example, you could have spent all that income in 2025 & still grown the NAV!

But again be warned … that’s only over this very short timeline when markets have performed well.

Let’s return to that 100% equity allocation thing we mentioned earlier. All our high yield funds above outperformed the traditional balanced portfolio. Retired growth investors are more likely to have a fixed income or cash component. Moreover, most financial advisors will probably not recommend 100% equity portfolios for retirement, regardless of the investment approach. But retirees investing in these new income ETFs appear to be able to tolerate a higher equity allocation. And that behaviour means that they have outperformed the traditional balanced portfolio in this instance. Indeed some income investors abandoned the balanced approach in favour of their new income strategy.

That’s the crux of the strategy comparison dilemma. Sometimes, we’re not really comparing apples to apples. The first big question is this: should a retiree have an equity allocation of 100%? And if that 100% equity allocation can be justified, would you want to own the growth or the income style portfolio? The answer is, as usual, it depends!

There are studies that support a 100% equity portfolio through the accumulation years and throughout retirement. One of the most recent, & one of the most thorough, is Beyond the Status Quo: A Critical Assessment of Lifecycle Investment Advice, from July 2025 by Anarkulova, Cederburg, & O’Doherty. This paper is widely discussed amongst the gurus online, but even professional advisors seem reluctant to tell their older clients to jump on board an all-equity portfolio during retirement. However, if this proves to be correct going forward, then an income fund that only slightly (& I’m not sure how to accurately define ‘slightly’ here!) underperforms an equivalent all-equity growth fund might be useful. After all, investing is both a mathematical & a behavioural exercise. If the higher income stream helps a retiree stay the course with a higher equity allocation, might that be a better solution for retirement?

I don’t know the answer to that one either. But it is fun to think about!

We don’t have enough history to understand how these income funds, & their income streams, might survive a more severe crash or a prolonged downturn yet. But I certainly look forward to seeing how things play out going forward. Let’s be real here, if a fund can deliver a 10% yield while growing the underlying NAV faster than inflation, who wouldn’t want a piece of that action, eh! In fact, if it came with inflation security, I’d probably take that bet with a far lower yield!

Unfortunately, I don’t think we can consistently predict such positive outcomes for these income funds. They have done very well in recent years. But their recent successes probably shouldn’t encourage others to retire too early. If your retirement plan was to work towards having a million-dollar portfolio supporting a 5% withdrawal rate, it might not be prudent to flip everything into a fund with a 10% yield & retire earlier with only a half-million-dollar portfolio today. Indeed, any strategy running at its limits won’t work very well if things turn bad. And, given a long enough retirement timeline, there will almost certainly be some bad times ahead. We need to plan our retirement accordingly. On top of those style deliberations, the 100% equity allocation has been part of the solution for some. But it remains an open question for others. We didn’t even get into the active versus passive conversation today! There really are a lot of moving parts to consider with all this. I wouldn’t be surprised to find some investors doing a mix of these strategies. As they tread water, waiting to see how things play out over time.

One last thing to consider is the impact of all this on financial planning exercises. We need to be careful about conflating distribution yield and total return. They are not the same thing. We cannot assume that high cashflows will remain intact for income funds, in the event that a market downturn severely draws down the underlying portfolio. And especially if that happens over longer periods of time. Even if the yield percentage remains high, the actual income stream in dollars could still be seriously reduced. I think sticking with FP Canada’s projection assumption guidelines for financial planning makes sense, regardless of the investing approach. But that’s a whole other conversation that we’ll save for another day. And maybe a downturn will provide the insights we need before I get round to it!

Meantime, wear your water wings in the deep end & take care out there!

If you want to learn more about saving & investing, please check out Double Double Your Money, available at your local Amazon store.

Important – this is not investing, tax or legal advice, it is for entertainment & conversation-provoking purposes only. Data may not be accurate. Check the current & historical data carefully at any company’s or provider’s website, particularly where a specific product, stock or fund is mentioned. Opinions are my own & I regularly get things wrong, so do your own due diligence & seek professional advice before investing your money.