Method and apparatus for enabling individual or smaller investors or others to create and manage a portfolio of securities or other assets or liabilities on a cost effective basis

• US 20040024678A1
• Filed: 07/28/2003
• Published: 02/05/2004
• Est. Priority Date: 03/11/1998
• Status: Active Grant

• Current Assignee: Folio Financial Incorporated (Goldman Sachs Group Incorporated)
• Original Assignee: Steven M.H. Wallman
• Inventors: Wallman, Steven M.H.
• Granted Patent: US 7,546,267 B2
• Time in Patent Office: Days
• US Class Current: 705/36
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis
• CPC Class Codes: G06Q 40/10 Tax strategies
• CPC Class Codes: G06Q 40/12 Accounting

Abstract

Smaller investors can create and manage on a cost-effective basis a complex portfolio of securities using a mechanism that enables the investor to provide to the system the investor'"'"'s preferences regarding his portfolio, to generate a portfolio, including fractional shares, that reflects the investor'"'"'s preferences. The system then permits aggregation of the orders, and netting of orders, generated by multiple investors at various times during the day for execution. In addition, the structure of the computer-based system of the present invention allows its cost to be based on access to or usage of the system (such as a monthly fee) as opposed to by securities orders entered into the system as per common brokerage. The result is that the investor can create a portfolio of directly owned securities with attributes, such as diversification, similar to a mutual fund. As compared with the problems with existing systems, the computer-based system of the present invention provides complete control for the investor over what securities can be selected, and in what weights and amounts, as well as control over the tax effects of purchases or sales of the securities comprising the portfolio, preventing the investor from being presented with unwanted taxable effects due to discretionary sales transactions of fund managers. In addition, the computer-based system of the present invention provides all the information necessary to monitor and manage tax effects and capability to sell or buy the individual securities in his portfolio to obtain desired tax benefits, all shareholder rights with respect to each security in the portfolio to the investor and full ownership and control over all investment, voting and other decisions regarding such securities. The computer-based system of the present invention also allows for parameters to be set with respect to a portfolio to ensure that it stays within certain diversification or risk limits. Furthermore, the computer-based system of the present invention provides direct control over the charges and expenses that will be incurred, and the possibility of making multiple intra-day investment decisions by the investor, if he wishes. Moreover, the computer-based system of the present invention provides control over all factors in the portfolio and modification of them as the investor sees fit.

Claims

1. A method for enabling a plurality of investors to make periodic investments in a portfolio of securities comprising the steps of:

receiving data from each of the plurality of investors regarding amounts of money to be invested in each investor'"'"'s portfolio;

accessing an electronic payment system upon receiving instructions from an investor to purchase securities to obtain payment for the required purchases; and

storing each investor'"'"'s portfolio in a central database.

2. A system for creating a portfolio of assets and executing trades in the assets to modify the portfolio, comprising:

a) a first processor interfaced with an investor'"'"'s PC to select a plurality of assets to be in the investor'"'"'s portfolio based on the investor'"'"'s indicated preferences, to manage the portfolio in accordance with market changes and changes in the investor'"'"'s indicated preferences, and to electronically place at least one trading order in accordance with the investor'"'"'s indicated preferences;

b) a communication interface coupled to the processor and coupled to a plurality of other investors by which the processor electronically places the at least one order;

c) a central processor coupled to the communication interface, receiving a plurality of trading orders from among the plurality of investor'"'"'s PC'"'"'s, including at least one economically unviable trading order, aggregating all received trading orders into a single order for each asset among the received trading orders, and electronically forwarding the aggregated trading orders for execution to a third party.

3. A method for creating a diversified portfolio of investments using a series of small periodic payments comprising the steps of:

soliciting user preference information from a user, said user preference information including a list of investments, and desired rates of risk and return;

creating a portfolio of investments based on user specified rates of risk and return;

transmitting the portfolio of investments to a central computer;

splitting the portfolio of investments into its constituent investments; and

executing trades to implement the constituent investments where possible, and acting as principle for those investments where an amount to invest is not sufficient to purchase a whole unit of the underlying investment.