Chat GPT vs GPT-3

I have been playing around with OpenAI, and while I do think that its service is still behind Google’s own AI, it’s an incredible tool. This afternoon, I wanted to put ChatGPT up against OpenAI’s DaVinci GPT via its playground, which is the most powerful tool currently with API privileges.

Here’s what happened… I asked each to write a report on Compound Interest, thinking about it in terms of investing mostly, but neither thought along those lines.

GPT-3 DaVinci

Compound Interest is a type of interest that is calculated on the principal amount of a loan or deposit as well as the accumulated interest of past periods. It is a powerful tool that can be used to grow wealth over time. Compound interest is calculated by multiplying the initial principal amount by one plus the annual interest rate raised to the number of compound periods minus one. Put another way, compound interest is interest earned on interest.

To illustrate, let’s assume that we have $1,000 deposited in an account that pays 5% interest. After one year, the account would have $1,050, which is the original $1,000 plus the 5% interest. The next year, the account would have $1,102.50, which is the original $1,050 plus the 5% interest. On it goes for as long as the interest rate and principal remain the same. The power of compound interest is that it can quickly amplify small amounts of money into large sums.

The longer the time period and the higher the interest rate, the more dramatic the effect. For example, if the $1,000 remained in the 5% interest account for 25 years, it would grow to $3,387.51. This is the power of compounding interest. Of course, compound interest is not always a benefit. If you have a loan, the interest compounds and can quickly add up to a large amount.

In conclusion, compound interest can be a powerful tool for growing wealth over time. It can also be a burden if you have a loan. It is important to understand how compound interest works in order to make the most of it.

Chat GPT (v4)

Compound interest is the interest on a loan or deposit calculated based on both the initial principal and the accumulated interest from previous periods. It is the interest on interest, and it is the reason why an investment that earns compound interest grows at an exponential rate.

When interest is compounded, the interest earned in one period is added to the principal, so that the interest earned in the next period is based on a larger amount. The more frequently interest is compounded, the greater the amount of interest earned over a given period of time. For example, if a deposit earns an annual interest rate of 5%, the interest earned in the first year is $50 on a $1,000 deposit. If interest is compounded annually, the deposit will be worth $1,050 at the end of the first year. If interest is compounded semi-annually, the deposit will be worth $1,025 after six months and $1,051.25 after one year.

Compound interest can work in favor of both borrowers and savers. For borrowers, it can result in a significant increase in the total amount of interest paid over the life of a loan. For savers, it can result in a significant increase in the value of an investment over time.

There are a few key factors to consider when calculating compound interest:

  • Principal: The initial amount of money that is invested or borrowed.
  • Interest rate: The percentage of the principal that is charged as interest.
  • Compounding frequency: How often the interest is added to the principal (e.g., annually, semi-annually, quarterly, monthly, daily, etc.).
  • Time: The length of time over which the interest is calculated.

There are many online calculators and financial tools that can be used to calculate compound interest, and it’s important to use the right one for your situation.

In conclusion, Compound interest is the interest on interest, it can grow the investment at an exponential rate and can be favorable for both borrowers and savers. The calculation of compound interest depends on the principal, Interest rate, compounding frequency and time. There are many online calculators available to help with the calculation.

Thoughts

It’s obvious that GPT-4 through ChatGPT is superior in terms of depth, even if it hasn’t fully been able to access the internet yet. At the same time, it is best when used for math and set facts or sometimes basic creativity.

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Jonathan Poland

20+ years advising leaders. These are notes from the journey. Learn more @ mrplnd.com